By SHELLEY GRIESHOP
sgrieshop@dailystandard.com
A new electronic check handling system has made its debut at
local businesses causing a little confusion and a lot of curiosity
from customers.
Those writing checks at Knap’s Drive Thru Carry Out in
Coldwater know the drill: the check is swiped through a machine
by an employee and immediately returned stamped “void.”
The customer signs a receipt just like a credit card transaction
and retains a copy with a brief written explanation.
Knap’s owners purchased special equipment for the electronic
checking process from a company called Global Payments Inc.
The equipment — no bigger than a telephone — reads
the entire image of the check and sends the information across
telephone lines to Global, which distributes the information
back to the banks.
Knap’s began electronic check conversion at the beginning
of the year.
“People are getting used to it already,” said Teri
Bailey, manager of Knap’s. “Most people have told
us they’ve experienced the e-check system at the mall
and figured it would come around here sooner or later.”
Bailey said Global pursues customers with insufficient funds
in their accounts, so Knap’s doesn’t have to. The
system also will not accept checks on closed or past problem
accounts, she said.
“We basically have little fear now of taking checks from
anyone from anywhere,” she said.
The new cutting edge technology was created to help reduce,
and someday eliminate, the expensive and time-consuming handling
of paper checks by banks and businesses.
Some Wal-Mart stores around the country have used the e-check
conversion system for several years now as a pilot program;
the technology has not yet been implemented at the Celina store.
Legislation called the Truncation Act of 2003 (also known as
The Check Clearing for the 21st Century and Check 21) was signed
into law Oct. 28, 2003, and takes effect this October. The new
law gives financial institutions the right to create a “substitute
check” (photocopies of the originals) from a digital image
to serve as the legal equivalent of the original check, when
necessary.
(Remember, the original check is returned to the customer and
not the bank.)
The new process also will greatly reduce transportation of checks
from businesses to banks. Following the Sept. 11 terrorist attacks
when planes were grounded, millions of dollars in checks stood
idle at airports and impeded the flow of money through our economy,
according to the Federal Reserve.
Electronic check conversion works similar to a debit card, withdrawing
funds from checking accounts electronically and much faster
than the “paper” method.
“With the electronic method the amount is usually withdrawn
from an account at least the next day, and in some cases the
same day,” explained Bruce Slavik, chief financial officer
at Peoples Bank in Coldwater.
Docksider Marathon station on Main Street in Celina also uses
a form of the new system. Employees there told The Daily Standard
customers don’t even have to fill out the check if they
don’t want to because the check is returned to them anyway
as a receipt. At Docksider, transaction information is printed
on the back of the check for the customer to keep. The business
gets its own receipt.
Slavik said bank employees currently handle 15,000-20,000 checks
on a typical Friday — with check amounts recorded one
by one. Receiving the information electronically will do away
with at least part of that task, creating a substantial savings
in labor, he said.
“It will cut costs down the road, but first there will
be the capital investment for equipment,” Slavik said.
Peoples Bank, similar to most others in the area, will need
to acquire extra equipment in order to connect with other communication
networks such as Global Payment. Most financial institutions
have imaging equipment that reads the magnetic ink character
line at the bottom of checks identifying the personal account
number, bank routing number and check number.
One downside to the new technology is the risk of hackers stealing
the vital account information sent electronically.
“There will have to be assurance that the information
is protected and not able to be tapped into,” Slavik said.
Slavik said he’s watching the new process with a skeptical
eye for now. The new system could cause some people to ditch
their checkbooks altogether, he said.
“If this catches on, I think more people might just switch
to using debit or credit cards,” he said. “Why pay
for checks?”
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