'Electronic Checks' Give Paper Payments New Life | Bank Innovation | Bank Innovation

‘Electronic Checks’ Give Paper Payments New Life

checks_liveThe check is not dead. Far from it, in fact.

The venerable little slip of paper has been given new life, ironically, by remote deposit capture, which has simultaneously taken foot traffic away from bank branches.

A new digital innovation from Deluxe and VerifyValid promises to keep the check alive and well for some time, and it’s one that could also save businesses time and money.

Launched at the end of July, Electronic Checks from Deluxe and VerifyValid are sent via email and retrieved by clicking a link. They require no paper, at least not on the sender’s side, and no postage. They also arrive faster than checks sent via mail. The received Electronic Check appears as a printable check (or checks — more on that later) in PDF form that the user can print and deposit, even via RDC.

Check recipients with VerifyValid accounts can enter checks directly into accounting systems or deposit them into linked bank accounts.

Deluxe is known for products that were innovative in a bygone era, from perforated checks to laser-printed checks. Its partnership with VerifyValid brings it into the digital space. Deluxe serves more than 4 million business customers.

E-checks can be sent in bulk, which saves businesses — the largest users of checks — time and money. Businesses receive more than 20 billion check-based payments a year, according to the 2012 Federal Reserve Payments Study. If a company needs to pay multiple invoices from the same vendor, say a utility or power company, that can be done from the digital dashboard that produces multiple checks at one go. The system can import comma-delimited files from accounting software and automatically produce any number of checks.

Disbursements to consumers, which amount to $3 trillion a year and are largely delivered via check, can be delivered digitally (if the sender knows the recipient’s email address), as Aite Group senior analyst Ron Shevlin points out.

Remote users can also authorize the sending or signing of checks, removing friction from the process.

Beyond convenience and cost savings, “E-checks keep the banks at the center of the customer relationship,” said VerifyValid CEO Paul Doyle, while person-to-person payments from third party vendors do not. Regulators look kindly on the products, since they are not a new category, but rather just a variation on a tried and true form.

E-checks also help ease heavily check-dependent businesses into the digital world, Doyle said. The future, after all, will be nearly all digital — and it seems checks will still be there.