What Is Electronic Check Presentment (ECP)?

Electronic check presentment (ECP) is a process that allows financial institutions to exchange digital images of checks instead of paper to increase the speed of the check-cashing process. The signing of the Check Clearing for the 21st Century Act (Check 21) by President Bush on October 28, 2003, permitted the use of electronic check presentment.

Electronic check presentment saves financial institutions the cost of sending paper checks to other financial institutions and the cost of storing paper checks. In addition, ECP streamlines the processing of monetary transactions and enables financial institutions to provide better customer service.

Understanding Electronic Check Presentment (ECP)

With electronic check presentment, when a check is deposited into a payee's bank account or a check is cashed, an electronic copy of the check is sent to the bank or financial institution that houses the account from which the funds were drawn. The bank that houses the payer's account applies the check against the payer's account and deducts funds from the account in the amount of the check.

The electronic check presentment (ECP) system allows this to happen more quickly, as paper checks no longer have to travel through the mail to reach the payer's financial institution. Instead, financial institutions take a picture of the front and back of checks and send them electronically via secure data networks. Theoretically, with the ECP system, the payer's institution can receive and process checks the same day that the payee deposits or cashes the check.

Check Truncation and Substitute Checks

The Check 21 Act allows financial institutions to remove paper checks from the check processing flow in order to make an electronic or digital copy of the check. This process is called check truncation and the electronic check information can be used to create a paper substitute check, if needed.

A substitute check is a high-quality reproduction of the original check. As long as the substitute check accurately depicts the information on the original check, it is legally the same as the original paper check. Only banks can create substitute checks and each check must include a statement from the bank confirming it is a legal check copy.

Benefits of Electronic Check Presentment (ECP)

Electronic check presentment (ECP) is a technological and administrative advancement that has benefited the financial industry and its customers. The main benefits of electronic check presentment are faster and more efficient check clearing, along with the potential to detect check fraud or insufficient funds at an earlier stage.

ECP enables banks to create and preserve a digital copy of checks, whereas paper checks can be lost or damaged in transit. Funds from electronic checks also have a lower risk of being stolen as there is no physical check involved.

Special Considerations

Since security is a concern with digital imagery, digital images of checks use strong digital signatures for authentication, allowing another step for security. The popularity of electronic checking has led to the industry adopting more security features, such as public-key cryptography and multiple authentications. The technology has expanded to all areas of banking, allowing customers to deposit checks electronically using mobile phones and banking apps.

Correction—April 24, 2024: This article has been corrected to state that electronic check information can be used to create a paper substitute check.