Electronic Payments Association, Nacha, estimates that 32 million paper cheques were converted into electronic cheques at retail locations in 2000, a figure higher than originally expected.
Stephen A. Schutze, chairman of Nacha's Electronic Cheque Council and director of e-strategies at the American Bankers Association, says: "Previously the Electronic Cheque Council predicted that 25 million cheques 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 cheque conversion is growing rapidly."
Electronic cheques are processed through the Automated Clearing House (ACH) Network, an electronic payments system commonly used for direct deposit and direct payment. In an electronic cheque transaction, a consumer presents a merchant with a cheque. The merchant runs the cheque through an electronic reader, capturing the bank account number and routing information on the cheque as well as the cheque serial number. The merchant then returns the cheque to the consumer marked or stamped "Void," or similar language. The consumer signs a receipt authorising the electronic transaction and keeps a copy as a record of the purchase. The merchant uses the cheque information, along with the transaction amount, to initiate an ACH debit, which is processed electronically through the ACH Network.
The estimate for electronic cheque 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.