Converting paper checks to electronic ones is becoming more common, and people should know what it is and how it can affect them. No one wants a check to bounce or a sale to be turned down because they don't have enough money in their account.
So, what is conversion of electronic checks?
In simple terms, electronic check conversion is a transaction in which your written check is only used as a source of information. The number on the check, your account number, and the number that identifies your bank, called the routing number, are all taken from it. Then, a one-time electronic payment is made from your account using this information about your check. An electronic funds transfer is another name for this. The main difference from what we used to know about check payments is that the written check itself is not the method of payment.
You will know that your paper check is being turned into an electronic check because, by law, you must be told when you give your check that the information on it may be used to make an electronic payment from your account.
Consumers should know that this information may be given to them in different ways. For example, a credit card company might put a notice in your monthly bill telling you that if you pay by check, your check could be used to make an electronic fund transfer from your bank account.
If you use checks at stores that convert them to electronic checks, you will be notified in two ways. The first notice is a sign that is usually at the register. It says that if you pay with a written check, you agree to let the store take money from your account electronically. The second notice is a copy of the notice that was posted, which you should keep for your records. This second notice is usually written on the sales receipt.
Consumers should be aware that an electronic transaction may be processed faster than a check. Because of this, you should make sure the money is in your account when you make the transaction.
Even if you usually get your original checks or copies of them with your statement, your bank will not give you back any checks that have been changed. Many people have never heard of this before. Also, when you do an electronic check conversion transaction, you have different rights than when you pay with a regular check.
When an error happens with an electronic check conversion, the law says that the bank has to look into it. Consumers also have the right to know that if they pay with a check, the information on the check could be used to make an electronic payment from their account. You should also be told about any fees the store will charge you if your account doesn't have enough money to cover the transaction.
Consumers should know that if there isn't enough money to cover a purchase, merchants can charge for "non-sufficient funds" just like they can with written checks. This is the same as with checks that are written out.
