The Case of the Disappearing Check: What is Electronic Check Conversion?

As a responsible consumer, you want to know where your money goes. You also want to know that you have funds in your checking account to cover the checks you write. For years, you’ve probably engaged in that monthly ritual: You balance your checkbook using cancelled checks returned with your bank account statements. You’ve probably noticed that the mailings from your bank have recently gotten a lot lighter, and the checks you wrote last month never appear again. In this day of electronic transactions, it is the information on the check that’s important, not the check itself.

Information on your paper check includes your name, account number, the routing number or the bank’s identifying number and the payment amount. This is all the information necessary to withdraw funds from your account. Today, more and more businesses are choosing electronic payment processing over processing paper checks. This is called Electronic Check Conversion.

Generally, it’s up to the business, not you, about whether to process a check electronically. If you do not want your check processed by electronic check conversion, you will be asked for another form of payment such as cash or credit card.

A business that wants to use electronic check conversion, must give you notice as well as notice of any fees that may be deducted from your account if your electronic check “bounces.” Notices may appear in a variety of ways. A store, for example, may post a notice near the register. For payments you mail, the notice may be included in your monthly statement or the fine-print terms and conditions you receive upon opening an account.

Electronic check conversion may be used when you make purchases in person at a store or when you mail a check to pay your credit card, utility or mortgage account payment. Either way, the growing use of electronic check conversion means you have to be more diligent than ever about tracking your payments and correcting errors in your account. When checks are processed electronically, your rights, remedies, and potential losses are governed by the federal Electronic Funds Transfer (EFT) Act. This is the same law that governs your ATM and debit card transactions.

Unauthorized electronic transfers from your bank account can be far more costly than unauthorized charges to your credit card, which are generally limited by law to $50. Unauthorized electronic check conversions must be reported within 60 days after your bank mails a monthly statement that includes an error. If not reported in the allotted time, you stand you lose all the money in your account plus the unused portion of your credit for overdrafts.

Even if you have resisted “electronic” banking, today there is little chance of avoiding the new era completely. The following tips may help you avoid some pitfalls of the electronic age:

  • Keeping close tabs on your account is your best defense against identity theft, other types of fraud, or just plain careless errors. Balance accounts as soon as statements arrive in the mail. Better yet, monitor accounts online. New security features have provided an added comfort level to online account access.
  • Record all transactions immediately. Account withdrawals may come in a variety of forms including, ATM withdrawals, debit card transactions, preauthorized payments, or electronic check conversions. Failure to record a single transaction can cost you money if your electronic check “bounces.”
  • If you buy from a store that uses electronic check conversion, be sure to ask for a receipt.
  • Report errors immediately to your bank. The sooner you report an unauthorized transfer, the less your risk of loss.
  • Guard the information printed on your checks as you would any other valuable data. Shred old checks, account statements, or unused deposit slips that include your bank account information.
  • Use paper checks sparingly. Only use checking account information when dealing with trusted companies. Be especially reluctant to give your checking account information for telephone or Internet transactions.
  • Don’t rely on the “float.” A check processed by electronic check conversion will withdraw funds immediately, just like a debit or ATM withdrawal.


For more tips and further information about electronic check conversion, see the following government publications: