E-Checks vs Paper Checks – The Reason Why Both Exist Simultaneously

Some people still wonder about the relevance of paper checks. With banks offering e-check facility, why are traditional paper checks still around ? That’s because echecks were never introduced to replace paper checks. Some businesses use both echecks and paper checks to suit different payment scenarios. Before we go ahead and reveal the advantages of both, let’s cover the basics.

What are Echecks?

Just by the name, it’s easy to figure out that echecks stand for electronic checks. Much like a standard paper check, electronic checks contain a tracking number and other banking information. It’s simply a virtual version of a paper check that authorizes banks to send money from one account to another. The entire point of an electronic check is submitting the check online without having to go to the bank. Here’s how it works. Customers can walk into a business establishment and present a paper check to pay for the items bought. The person at the checkout counter will receive the paper check and scan it using an app or a reader. The scanned information is then sent to the bank, at which point the money is set aside for being transfered to the recipient’s account. Customers can even create echecks without paper checks. All they need to do is present their banking information at the checkout counter and allow businesses to create an echeck. Customers then need to authorize the echeck online or via phone to complete the payment.


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What are Paper Checks?

Paper checks are written instructions for banks that contain the banking information of the account holder as well as recipient information. This physical paper check needs to be handed to the recipient, who then needs to present it at the bank before the money could be transferred. For anyone to issue paper checks, they need to have a checking account and a valid

checkbook. After using up the checkbook, account holders need to either shop for cheap checks online or they need to request for a new checkbook from the bank before they can make further payments.

Advantages of Echecks

Can Be Generated Online: Unlike paper checks, echecks can be generated without actual paper checks. This means there is no chance of payments being stalled due to lack of check pages.

Zero Chance of Being Lost or Stolen: When it’s generated online via app or netbanking, there is no way for an echeck to get lost or stolen. This, however, is a very real risk when issuing or receiving paper checks.

Faster Processing Time: The time consuming chore of going to the bank and depositing the check is eliminated when using echecks. This significantly cuts down on the processing time.

Advantages of Paper Checks

Can Be Issued Irrespective of Account Balance: Echecks can only be generated if the account has enough money to clear the fund. However, paper checks can be issued irrespective of the account balance.

Integration with Accounting Software Packages: Paper checks can be integrated with accounting software packages. Using these software programs businesses can print checks in bulk as well as maintain a database of all the payments made and attach them to invoices.

Slower Processing Time: How can slower processing time be an advantage? Well, businesses usually issue dozens of checks every month. A slower processing time ensures the money stays in the account for a few days extra and thereby earn more interest. This also gives businesses more time to keep their accounts sufficiently funded.


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Ajay is Tech blogger. He contributes to the Blogging, Gadgets, Social Media and Tech News section on TechFrill.