Posted by NationalACH on Jun 11, 2015
high risk processing

E Checks Still Relevant in Digital Age

Echecks based on Check 21 technology is frequently seen as an alternative to card and ACH payments, but how exactly did it come into existence, and most importantly, what is the place of this payment method in an increasingly digital world?

Some History on Check 21

The beginnings of Check 21 date back to 2003 when the Check Clearing for the 21st Century Act was passed, allowing for the creation of a digital version of a paper check.  Once the digital version is created, these is no need to deal with it in physical form, which means that the process is simplified considerably. An individual can use any kind of device, such as a scanner, camera, or mobile phone, to create the image. An essential characteristic of Check 21 is that it does not abide by the rules and fees of NACHA, the organization that handles ACH payments.

The main technique behind the digitization of Check 21 is called “truncation”. This means that both sides of the check are scanned and used as such, but they can be printed on a special type of document, if this version is still needed. Since 2003, however, Check 21 has become so common that most banks have the technology to process them solely based on the electronic format.

The gradual introduction of Check 21 means that banks and customers will deal less with paper, but is this enough to sustain the popularity of this payment method? While innovations such as Virtual Check 21 makes the process smoother and decreases the charge-back rate and the not sufficient funds rate, the answer to the previous question is no.

According to a study carried out at the end of 2014 by Celent, a prestigious research and consulting firm specialized in tech and finance, the number of Check 21 paper transactions is expected to decline from 22.4 billion items in 2010 to around 8.7 billion in the not so distant future – 2017. This means that as the volume of checks will decrease, the cost per item will increase, thus making this payment method even less competitive on the market.

Check 21, however, will not disappear overnight, at least not in the US. Currently, about 60% percent of checks originate from the US, claims Celent, so the trend is expected to be less steep compared to what will happen in other markets. It remains to be seen how consumers will react to the imminent fall into disuse of paper in financial transactions and whether they will agree to switch to faster, more efficient methods of payment.


Irrespective of what the future might bring, right now many customers expect to see echecks as one of the payment methods listed on a your website.

And since a large variety of payment methods contributes to better conversion, electronic check processing can be nothing but beneficial to your business. 

Do you want to accept echecks?