Electronic Check Presentment (ECP)

What Is Electronic Check Presentment (ECP)?

Electronic check presentment (ECP) is an interaction that permits financial institutions to exchange digital pictures of checks rather than paper to increase the speed of the check-changing out process. The signing of the Check Clearing for the 21st Century Act (Check 21) by President Bush on October 28, 2003, permitted the utilization of electronic check presentment.

Electronic check presentment saves financial institutions the cost of sending paper checks to other financial institutions and the cost of putting away paper checks. Likewise, ECP smoothes out the processing of monetary transactions and empowers financial institutions to give better customer service.

Figuring out Electronic Check Presentment (ECP)

With electronic check presentment, when a check is deposited into a payee's bank account or a check is changed, an electronic copy of the check is shipped off the bank or financial institution that houses the account from which the funds were drawn. The bank that houses the payer's account applies the check against the payer's account and deducts funds from the account in the amount of the check.

The electronic check presentment (ECP) system permits this to happen all the more rapidly, as paper checks never again need to go through the mail to arrive at the payer's financial institution. All things being equal, financial institutions snap a photo of the front and back of checks and send them electronically by means of secure data organizations. Hypothetically, with the ECP system, the payer's institution can receive and handle checks that very day that the payee deposits or changes out the check.

Check Truncation and Substitute Checks

The Check 21 Act permits financial institutions to eliminate paper checks from the check processing flow to make an electronic or digital copy of the check. This interaction is called check truncation and the electronic check is alluded to as a substitute check.

A substitute check is a great reproduction of the original check. However long the substitute check precisely portrays the data on the original check, it is legally equivalent to the original paper check. No one but banks can make substitute checks and each check must incorporate a statement from the bank affirming it is a legal check copy.

Benefits of Electronic Check Presentment (ECP)

Electronic check presentment (ECP) is a mechanical and administrative progression that has benefited the financial industry and its customers. The fundamental benefits of electronic check presentment are quicker and more efficient check clearing, along with the possibility to recognize check fraud or insufficient funds at a prior stage.

ECP empowers banks to make and save a digital copy of checks, though paper checks can be lost or harmed in transit. Funds from electronic checks likewise have a lower risk of being taken as there is no physical check included.

Special Considerations

Since security is a concern with digital symbolism, digital pictures of checks utilize strong digital marks for authentication, permitting one more step for security. The prominence of electronic checking has prompted the industry embracing greater security highlights, like public-key cryptography and various authentications. The technology has expanded to all areas of banking, permitting customers to deposit checks electronically utilizing mobile telephones and banking applications.

Features

• With ECP, banks take photos of the front and back of checks and send these digital pictures electronically to different banks for processing.
• The Check Clearing for the 21st Century Act is the federal law made in 2003 that permits banks to increase the number of checks they process electronically, subsequently making check processing quicker and more efficient.
• Electronic check presentment (ECP) is an interaction that permits banks to make digital pictures of paper checks.
• Prior to electronic check presentment (ECP), banks needed to mail paper checks starting with one institution then onto the next to complete transactions.