The Electronic Check Placement (ECP)

IntroductionPast twenty years, people have witnessed the prosperity of the finance and bank industry due to the deregulation of governments and more innovative products in the markets. However, even though more and more people now use electronic methods such as online banking, credit card, debit card, pre-approval payment, and pre-authorized debit to pay their bills, the check still plays an important role in Canada’s payment system especially in business-to-business transaction. According to statistics data collected by Canadian Payment Association (CPA), in 2004, 24.04% payment in volume, and 69.67% payment in value are still conducted in the paper form through the Automatic Clearing Settlement System in Canada. Currently, checks are processed and cleared in our payment system by being physically collected, encoded, sorted, placed, and archived in financial institutions, six regional processing centers, companies, and individuals, which is characterized by being inefficient, incurring float loss for depositors, being difficult to detect check fraudulency, and being vulnerable to bad weather and airport security incident.

Cheque sample for a fictional bank in Canada using...

Cheque sample for a fictional bank in Canada. May ...

Payment Method

Addressing the deficiency of our current paper-based payment system, Canadian Payment Association, a not-for-profit association managing Canada’s national clearing and settlement system, is leading an industry-wide initiate to adopt an innovative clearing process based on check images. Formerly referred to as “Truncation and Electronic Cheque Placement” (ECP), the new clearing process will enable financial institutions, corporations, and individuals to benefit from more efficiency, more convenience, improved customer service, and reduced cost. The key of success of the new processing system relies on the cooperation among financial institutions, corporation, processing equipment and software providers, and consumers. Due to difficulties associated with changing individuals’ paying habits and the time spent on educating consumers, we cannot forecast a checkless society in the near future. Therefore, ECP provides a best complement to our current paper based payment system.

How Checks Are Processed...