Electronic checks provide benefits, warrant caution
by Nick Nance, reporter

   The next time a customer writes a check to a local merchant, the cashier may hand the check back after the transaction.

   This new procedure may sound like a good way to keep up with spending, but there are disadvantages.

   In a recent Consumer Alert, The Federal Trade Commission warned consumers there may be no float on your check.

   In other words, if someone writes a check today, he better have funds in his account today to cover it. If he does not, he will be subject to the endless fees merchants and banks charge.

   The Electronic Payments Association estimates that 32 million paper checks were converted into electronic checks at retail locations in 2000. Electronic check conversion begins the moment a customer hands a check over to the merchant.

   The merchant then processes the check through an electronic system that captures the consumer’s banking information and the amount of the check.

   Once the check is processed, the purchaser is asked to sign a receipt authorizing the merchant to present the check to the bank electronically and deposit the funds into the merchant’s account.

   The merchant then gives the customer a receipt of the transaction.    When the check is processed by the merchant, it should be voided or marked to ensure that it cannot be used again.

   With electronic check conversion, it is important that one keep his or her store-processed checks because these checks are never processed by a bank in traditional ways. Thus, a bank may be unable to supply its account holders a duplicate copy.

   Those who are concerned about bounced check fees may want to think about over-draft protection or consult their bank for the best solution.
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