Tilted Forum Project Discussion Community - View Single Post - Who the hell still writes checks anymore?

Craven Morehead · 10-03-2006, 05:52 AM

Pretty much only use checks for bill payment. The paper trail is with checks until recently was better than any other form of payment.

However, checks are frequently being turned into electronic transactions by the company receiving them and the paper item is 'killed' at that time. The electronic transaction is then sent through the Federal Reserve ACH system, eventually posting against your account. You may see it with the term ARC appearing on your statement. Stands for Account Receivable check conversion. The item is cleared as an ACH item and your bank handles it a little differently. There are different regulations that banks must follow regarding your rights in disputing payments that are paper vs. electronic. You're protected in either case, the method are different, though. Also it takes less time for an ACH item to be presented to you bank than the equivalent paper item. Less float.

Float? Forget about it. Within three years, if not sooner, nearly every check in the US will no longer physically be presented to your bank for posting. Instead an image of the check will be transmitted to your bank for posting. What once took three days to post will now take one. This is an outgrowth of Check 21 from 2 years ago. Most banks are image enabled today, most are moving towards image exchange. Check 21 is an outgrowth of 9-11 (a whole diffrent story for a different time).

Electronic bill payment - many banks offer this as a service with their internet banking. Most don't charge. But it is pretty expensive for the bank to offer and so far the volume of transactions have been disappointing. Ironically, up until a few years ago, most of these payments were eventually paid by check! The reason: this is a pay anybody system. You can send $50 to your nephew for graduating from high school. Unless you know his bank's routing number and his checking account number (assuming he has one) there is no other way to deliver the payment than by check. Also many companies could not integrate these payments when posted to their checking account with their accounts receivable system after the fact. Usually the payment is posted to account receivables then deposited to their checking account. The other issue with bill pay is the float days that banks impose. That the number of days in advance of the payment date that the funds are withdrawn from your account. In some cases an excessive amount of time is used (gotta pay for this service somehow) and that is detrimental to its acceptance.

10-03-2006, 05:52 AM	#12 (permalink)
Craven Morehead Custom User Title	Pretty much only use checks for bill payment. The paper trail is with checks until recently was better than any other form of payment. However, checks are frequently being turned into electronic transactions by the company receiving them and the paper item is 'killed' at that time. The electronic transaction is then sent through the Federal Reserve ACH system, eventually posting against your account. You may see it with the term ARC appearing on your statement. Stands for Account Receivable check conversion. The item is cleared as an ACH item and your bank handles it a little differently. There are different regulations that banks must follow regarding your rights in disputing payments that are paper vs. electronic. You're protected in either case, the method are different, though. Also it takes less time for an ACH item to be presented to you bank than the equivalent paper item. Less float. Float? Forget about it. Within three years, if not sooner, nearly every check in the US will no longer physically be presented to your bank for posting. Instead an image of the check will be transmitted to your bank for posting. What once took three days to post will now take one. This is an outgrowth of Check 21 from 2 years ago. Most banks are image enabled today, most are moving towards image exchange. Check 21 is an outgrowth of 9-11 (a whole diffrent story for a different time). Electronic bill payment - many banks offer this as a service with their internet banking. Most don't charge. But it is pretty expensive for the bank to offer and so far the volume of transactions have been disappointing. Ironically, up until a few years ago, most of these payments were eventually paid by check! The reason: this is a pay anybody system. You can send $50 to your nephew for graduating from high school. Unless you know his bank's routing number and his checking account number (assuming he has one) there is no other way to deliver the payment than by check. Also many companies could not integrate these payments when posted to their checking account with their accounts receivable system after the fact. Usually the payment is posted to account receivables then deposited to their checking account. The other issue with bill pay is the float days that banks impose. That the number of days in advance of the payment date that the funds are withdrawn from your account. In some cases an excessive amount of time is used (gotta pay for this service somehow) and that is detrimental to its acceptance. Last edited by Craven Morehead; 10-03-2006 at 05:55 AM..