October 18, 2002

More then 200 million e-check payments were made during the first half of 2002, an increase of more than 300 percent over the same period of 2001, according to NACHA, The Electronic Payments Association.

"E-checks are gaining acceptance in the marketplace," according to William B. Nelson, executive vice president at NACHA. "E-checks provide companies and financial institutions the benefits of electronic payment processing, while consumers gain the protection of Regulation E."

An e-check is an electronic debit to a checking account that's initiated at the point-of-sale, on the Internet, over the telephone, or via a bill remittance sent through the mail, and is processed using the automated clearinghouse (ACH) network. E-checks are covered by the Federal Reserve's Regulation E, which defines specific consumer rights and protections from error and fraud. No comparable federal regulation covers paper check and demand draft payments.

A recent study by the Federal Reserve shows that check use in the United States is declining, noted Nelson. "But with billions of checks still being written every year at the point-of-sale and for bill payment, e-checks are poised for substantial growth and will contribute to the decline of paper check processing."

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