Electronic check conversion is becoming more popular these days and consumers should know what it is and how it can affect them. The last thing anyone wants is to bounce a check or to have a clerk deny a sale because of a lack of funds in your account.
So what is electronic check conversion?
In simple terms, electronic check conversion is a transaction in which your written check is used only as a source of information. The information taken from it includes the check number, your account number, and the number that identifies your financial institution or the routing number. This information about your check is then used to make a one-time electronic payment from your account. This is also known as an electronic funds transfer. The written check itself is not the method of payment, which is the main difference between what we used to know about check payments.
You will know that an electronic check conversion is taking place because, by law, when you provide your check, you must be given notice that information from your check may be used to make an electronic payment from your account.
Consumers should understand that there may be different ways that this information is given to them. For example, a credit card company might put a notice in your monthly bill telling you that if you pay by written check, your check may be used to make an electronic fund transfer from your bank account.
For those who use checks at stores that use electronic check conversion, you will receive notice in two different ways. The first notice is a posted sign, usually located at the register, which states that if you pay by written check you are agreeing to let the store make an electronic fund transfer from your account. The second notification is a copy of the posted notice that you keep for your records. In most cases, this second notice usually appears on your sales receipt.
It is important for all consumers to understand that an electronic transaction may be processed faster than a check. For this reason you want to make sure that you have the money in your account when you make the transaction.
Your bank will not return any checks that are converted, even if you normally receive your original checks or images of those checks with your statement. This is something new to many consumers. In addition, you have different rights with an electronic check conversion transaction than you do with your normal check payments.
With an electronic check conversion, consumers have the legal right to an investigation by bank when an error occurs. Consumers also have the right to receive notice that if they provide a check as payment, information from the check may be used to make an electronic payment from their account. You must also be notified of any fees that the store collects if there is not enough money in your account to cover the transaction.
Consumers should understand that merchants can charge for non-sufficient funds just as they can do with written checks if there is not enough money to cover the purchase. This is the same as with written checks.