What Is Virtual Check out Presentment (ECP)?
Virtual check presentment (ECP) is a process that allows financial institutions to modify digital photos of assessments as a substitute of paper to increase the speed of the check-cashing process. The signing of the Check out Clearing for the 21st Century Act (Check out 21) by the use of President Bush on October 28, 2003, permitted the use of virtual check presentment.
Virtual check presentment saves financial institutions the cost of sending paper assessments to other financial institutions and the cost of storing paper assessments. In addition to, ECP streamlines the processing of monetary transactions and permits financial institutions to provide upper buyer improve.
Key Takeaways
- Virtual check presentment (ECP) is a process that allows banks to create digital photos of paper assessments.
- The Check out Clearing for the 21st Century Act is the federal law created in 2003 that allows banks to increase the selection of assessments they process electronically, thus making check processing faster and additional surroundings pleasant.
- Prior to virtual check presentment (ECP), banks had to mail paper assessments from one status quo to each and every different with the intention to complete transactions.
- With ECP, banks take pictures of the front and back of assessments and send the ones digital photos electronically to other banks for processing.
Working out Virtual Check out Presentment (ECP)
With virtual check presentment, when a check is deposited proper right into a payee’s bank account or a check is cashed, an virtual copy of the check is distributed to the monetary establishment or financial status quo that houses the account from which the funds have been drawn. The monetary establishment that houses the payer’s account applies the check against the payer’s account and deducts funds from the account throughout the amount of the check.
The virtual check presentment (ECP) machine lets in this to happen further in brief, as paper assessments no longer want to move backward and forward all through the mail to reach the payer’s financial status quo. Instead, financial institutions take a picture of the front and back of assessments and send them electronically by way of secure knowledge networks. Theoretically, with the ECP machine, the payer’s status quo can download and process assessments the identical day that the payee deposits or cashes the check.
Check out Truncation and Exchange Assessments
The Check out 21 Act lets in financial institutions to remove paper assessments from the check processing glide with the intention to make an virtual or digital copy of the check. This process is known as check truncation and the virtual check is referred to as a trade check.
A trade check is a prime quality copy of the original check. As long as the artificial check appropriately depicts the information on the original check, it is legally the identical as the original paper check. Most straightforward banks can create trade assessments and every check must include a statement from the monetary establishment confirming it is a prison check copy.
Benefits of Virtual Check out Presentment (ECP)
Virtual check presentment (ECP) is a technological and administrative construction that has benefited the financial industry and its customers. The principle benefits of virtual check presentment are faster and additional surroundings pleasant check clearing, along with the conceivable to hit upon check fraud or insufficient funds at an earlier degree.
ECP permits banks to create and deal with a digital copy of assessments, whilst paper assessments may also be out of place or damaged in transit. Price range from virtual assessments in fact have a lower likelihood of being stolen as there is no physically check involved.
Explicit Problems
Since protection is a concern with digital imagery, digital photos of assessments use robust digital signatures for authentication, allowing each and every different step for protection. The popularity of virtual checking has ended within the industry adopting further security measures, comparable to public-key cryptography and a couple of authentications. The era has expanded to all areas of banking, allowing customers to deposit assessments electronically using cellphones and banking apps.
