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02-09-04: Area checks go electronic


A new electronic check handling system has made its debut at local businesses causing a little confusion and a lot of curiosity from customers.
Those writing checks at Knap’s Drive Thru Carry Out in Coldwater know the drill: the check is swiped through a machine by an employee and immediately returned stamped “void.” The customer signs a receipt just like a credit card transaction and retains a copy with a brief written explanation.
Knap’s owners purchased special equipment for the electronic checking process from a company called Global Payments Inc. The equipment — no bigger than a telephone — reads the entire image of the check and sends the information across telephone lines to Global, which distributes the information back to the banks.
Knap’s began electronic check conversion at the beginning of the year.
“People are getting used to it already,” said Teri Bailey, manager of Knap’s. “Most people have told us they’ve experienced the e-check system at the mall and figured it would come around here sooner or later.”
Bailey said Global pursues customers with insufficient funds in their accounts, so Knap’s doesn’t have to. The system also will not accept checks on closed or past problem accounts, she said.
“We basically have little fear now of taking checks from anyone from anywhere,” she said.
The new cutting edge technology was created to help reduce, and someday eliminate, the expensive and time-consuming handling of paper checks by banks and businesses.
Some Wal-Mart stores around the country have used the e-check conversion system for several years now as a pilot program; the technology has not yet been implemented at the Celina store.
Legislation called the Truncation Act of 2003 (also known as The Check Clearing for the 21st Century and Check 21) was signed into law Oct. 28, 2003, and takes effect this October. The new law gives financial institutions the right to create a “substitute check” (photocopies of the originals) from a digital image to serve as the legal equivalent of the original check, when necessary.
(Remember, the original check is returned to the customer and not the bank.)
The new process also will greatly reduce transportation of checks from businesses to banks. Following the Sept. 11 terrorist attacks when planes were grounded, millions of dollars in checks stood idle at airports and impeded the flow of money through our economy, according to the Federal Reserve.
Electronic check conversion works similar to a debit card, withdrawing funds from checking accounts electronically and much faster than the “paper” method.
“With the electronic method the amount is usually withdrawn from an account at least the next day, and in some cases the same day,” explained Bruce Slavik, chief financial officer at Peoples Bank in Coldwater.
Docksider Marathon station on Main Street in Celina also uses a form of the new system. Employees there told The Daily Standard customers don’t even have to fill out the check if they don’t want to because the check is returned to them anyway as a receipt. At Docksider, transaction information is printed on the back of the check for the customer to keep. The business gets its own receipt.
Slavik said bank employees currently handle 15,000-20,000 checks on a typical Friday — with check amounts recorded one by one. Receiving the information electronically will do away with at least part of that task, creating a substantial savings in labor, he said.
“It will cut costs down the road, but first there will be the capital investment for equipment,” Slavik said.
Peoples Bank, similar to most others in the area, will need to acquire extra equipment in order to connect with other communication networks such as Global Payment. Most financial institutions have imaging equipment that reads the magnetic ink character line at the bottom of checks identifying the personal account number, bank routing number and check number.
One downside to the new technology is the risk of hackers stealing the vital account information sent electronically.
“There will have to be assurance that the information is protected and not able to be tapped into,” Slavik said.
Slavik said he’s watching the new process with a skeptical eye for now. The new system could cause some people to ditch their checkbooks altogether, he said.
“If this catches on, I think more people might just switch to using debit or credit cards,” he said. “Why pay for checks?”


Phone: (419)586-2371,   Fax: (419)586-6271
All content copyright 2003
The Standard Printing Company
P.O. Box 140, Celina, OH 45822


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