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depositing and clearing checks as images to payment initiation. To that end, The amendments make clear that
several companies have developed offerings that support check payments that warranties described in Reg CC as
are fully electronic, from online (or mobile) initiation through clearing and applying to paper checks now also
settlement. apply to ECIs and electronically re-
turned checks. Language also has
These initiatives, however, require workarounds because Reg CC provisions been added to the regulation indem-
regarding check presentment, returns and warranties don't apply to electronic nifying financial institutions receiv-
images or information. Deluxe Corp., for example, is sending e-checks to ing ECIs from any losses, claims or
"hundreds of thousands of payees," Chris Clausen, Executive Director, North damages arising from the fact that
American Payments and Transactional Services at Deluxe, told me in a recent an item did not originate as a paper
interview. To ensure the items are covered by Reg CC protections, however, check. And new indemnities have
Deluxe actually prints out paper items, then effectively recaptures the images been added that address losses from
to create RDC files. (Clausen noted it as a rapid-fire process.) ECIs not authorized by accounthold-
ers, as well as losses from duplicate
Financial institutions, meanwhile, typically use formal agreements with ECIs.The regulatory changes have
correspondents and check exchange partners to spell out warranties and other been languishing at the Fed since
terms for forward and return collection processes related to fully electronic 2014, which led me to speculate the
checks. amendments had been tabled indefi-
nitely. Now with the amendments set
Workarounds such as these shouldn't be necessary once the new Reg CC to take effect in just over a year, I'm
amendments take hold. They establish a formal definition of what the Fed optimistic that e-checks (ECIs) are
calls "electronically-created items." ECIs are check-like items that never exist in poised for takeoff.
paper form, the Fed stated.
When I spoke with Clausen, he said
Deluxe was on track to handle $5.3
Let Be Your EMV Expert! billion in e-check transactions this
year. And Deluxe isn't the only com-
pany that can support end-to-end
Your EMV Eco-System Made Affordable! electronic checks. Bank of America

eProcessing Network has the secure, payment solutions to help you stay current with the has teamed with technology startup
technologies that keep your merchants connected. And with real-time EMV capabilities, Viewpost to support online initiation
retailers can not only process contact and contactless payments, Apple Pay and Android Pay, of check payments. Viewpost gener-
they’re able to manage their inventory as well as balance their books via QuickBooks Online. ates paper checks from digital in-
structions then images and submits
the checks as RDC files.
There are other initiatives, too, like
Checkbook Inc., which has an email-
is EMV-Certified based electronic check product that
can be offered to consumers or busi-
nesses. Now that the Fed has adjusted
its regulatory framework to recognize
fully electronic checks, e-check adop-
tion can be expected to accelerate.

Patti Murphy is Senior Editor of The Green
Sheet and President of ProScribes Inc. She is
also the founder of InsideMicrofinance.com.
Email her at patti@greensheet.com.

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