While the use of paper checks has been declining for several years the use of electronic checks gas been booming.
From 2003 to 2013, the number of paper checks in use in the U.S. declined 2 billion per year. Not too long ago, as many as 30 billion paper checks were in use. Today that figure is about 17 billion and continuing to fall.
The reason for the decline is also clear: the rise of the electronic check, along with the mobile banking industry.
But for many small businesses and their consumers a central question remains: What is an electronic check? That’s because even if the brand or shopper in question uses an electronic check, they may have little idea how the process works. Electronic checks, like their paper counterparts, deduct funds from bank accounts directly. Usually, their tracking numbers resemble those on printed checks and account holders can add or subtract e-checks from balances in their checkbook registers as they would traditional checks.
E-Complish, a payment solutions provider, says it’s important businesses and consumers alike have a basic understanding of how electronic checks work so that they can feel comfortable making the paper check to electronic check transition. E-checks vastly expedite the payment processing timeline, expend less energy and cost than paper to process, and incorporate state-of-the-art tracking and reporting tools.
One of the key advantages in the e-check transition is the improvement in financial security. According to the Federal Trade Commission (FTC) some 9 million Americans are victims of identity theft every year. And the vast majority of these identity thefts — 85% — come from unlawful access from criminals obtaining personal details from bank statements, handwritten checks, and credit card invoices.
Electronic checks, called ACH transactions, on the other hand, offer electronic and automatic features that limit the people who can access private and financial data dramatically. What’s more, e-checks can’t be misplaced, nor can they be lost in the mail or stolen.