NACHA – The Electronic Payments Association estimates that 32 million paper checks were converted into electronic checks at retail locations in 2000. Electronic checks are processed through the Automated Clearing House Network, an electronic payments system commonly used for Direct Deposit and Direct Payment.
“Electronic check volume is higher than what was expected,” said Stephen A. Schutze, Chairman of NACHA’s Electronic Check Council and Director of eStrategies at the American Bankers Association. “Previously the Electronic Check Council predicted that 25 million checks would be converted in 2000. NACHA’s estimate shows that retailers are beginning to take advantage of the savings and efficiencies inherent in electronic payments rather than paper processing, and that this method of check conversion is growing rapidly.”
In an electronic check transaction, a consumer presents a merchant with a check. The merchant runs the check through an electronic reader, capturing the bank account number and routing information on the check as well as the check serial number. The merchant then returns the check to the consumer marked or stamped “Void,” or similar language.
The consumer signs a receipt authorizing the electronic transaction and keeps a copy as a record of the purchase. The merchant uses the check information, along with the transaction amount, to initiate an ACH debit, which is processed electronically through the ACH Network. A complete description of the transaction appears on the consumer’s monthly statement.
The estimate for electronic check volume in 2000 is based on a survey conducted by the Electronic Check Council as well as an actual count of transactions processed by ACH Operators for the 4th quarter of the year, the first period for which statistics are available.
In related news, NACHA statistics also show that 3,125,627 re-presented check (RCK) entries were processed through the ACH Network during the 4th quarter 2000. An RCK entry is a returned consumer check that is re-presented for payment electronically rather than through the paper check collection system.
NACHA publications are available to help retailers implement both electronic check and re-presented check programs. Visit NACHA’s online publications catalog at [http://www.nacha.org] , or call NACHA at 800-487-9180.
About NACHA – The Electronic Payments Association
NACHA is the leading organization in developing electronic solutions to improve the payments system. NACHA represents more than 12,000 financial institutions through direct memberships and a network of regional payments associations, and 600 organizations through its six industry councils. NACHA develops operating rules and business practices for the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill payment and presentment (EBPP), financial electronic data interchange (EDI), international payments, electronic checks, and electronic benefits transfer (EBT).