Electronic Banking: The Check Truncation Issue

Description

If all checks were replaced by electronic transactions, the exact cost savings would still be unknown, because estimates of the cost of using a check and the number of checks written each year remain in dispute. Consequently, estimates of cost savings range from $1.4 billion annually for truncation alone to $68 billion for replacing checks with electronic payments. A significant part of the savings comes from eliminating the handling, sorting, and physically transporting of checks to the paying bank. To clear checks electronically, banks must negotiate processing agreements thatmake it unnecessary to physically present the paper check. Since the benefits ... continued below

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16 pages.

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Eubanks, Walter W October 3, 2003.

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This report is part of the collection entitled: Congressional Research Service Reports and was provided by UNT Libraries Government Documents Department to Digital Library, a digital repository hosted by the UNT Libraries. It has been viewed 39 times . More information about this report can be viewed below.

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Description

If all checks were replaced by electronic transactions, the exact cost savings would still be unknown, because estimates of the cost of using a check and the number of checks written each year remain in dispute. Consequently, estimates of cost savings range from $1.4 billion annually for truncation alone to $68 billion for replacing checks with electronic payments. A significant part of the savings comes from eliminating the handling, sorting, and physically transporting of checks to the paying bank. To clear checks electronically, banks must negotiate processing agreements thatmake it unnecessary to physically present the paper check. Since the benefits are not uniformly dispersed among the participants, banks have found it difficult to obtain these agreements, thus constraining the widespread adoption of electronic check clearing.

Physical Description

16 pages.

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Congressional Research Service Reports

The Congressional Research Service (CRS) is the public policy research arm of Congress. This legislative branch agency works exclusively for Members of Congress, their committees and their staff. This collection includes CRS reports from the mid-1970's through the present--covering a variety of topics from agriculture to foreign policy to welfare.

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Creation Date

  • October 3, 2003

Added to The UNT Digital Library

  • June 11, 2005, 11:25 a.m.

Description Last Updated

  • Feb. 9, 2017, 8:29 p.m.

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Eubanks, Walter W. Electronic Banking: The Check Truncation Issue, report, October 3, 2003; Washington D.C.. (digital.library.unt.edu/ark:/67531/metacrs4656/: accessed October 17, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.