When was the last time you signed a check? Do you even know what a check is? Here in the digital future, most of our financial transactions are done using touchless payment systems like Apple Pay. It’s a lot faster than in olden times, when we had to write things down on paper. You know, that stuff we used to make from dead trees.
As it turns out, paper checks still have their place in the banking world. But now that we have the internet, we can send electronic checks (“e-checks” or “eChecks” for short) from place to place with relative ease, saving both time and money in significant amounts. E-checks might even become the fashionable way to invest in or bet on crypto.
They’re not for everyone, though. Here are some of the pros and cons to consider when it comes to e-checks.
Pro: Speed
It’s amazing how much red tape you get rid of with e-checks. Filling out paper checks takes time, and unless you’re handing them directly to the person in front of you, it takes even more time to send those pieces of paper to their destination. Is your check indeed in the mail? Maybe.
E-checks make a lot of these headaches go away. There’s still some work to do; you have to sign up for an e-check service, either through your bank/credit union or a “payment processor” like PayPal. And e-checks can still take 3-7 days to clear, since they’re processed on an electronic system called Automated Clearing House (ACH) that was first used in the mid-’70s. But at least you’ve eliminated all that other paperwork.
Con: Proof of Payment
The main drawback with e-checks is that your bank or financial institution won’t issue copies of canceled checks, which act as a “paper trail” to help provide proof of payment and other important financial information.
Because checks are best suited for larger transactions, where you don’t want to risk losing that money or having it stolen from under your nose, not having this proof of payment at your disposal is less than ideal. For your records, look instead for a confirmation e-mail or notification – assuming you receive one from the people at the other end.
Pro: Cost Savings
Time is money, so you can expect to save plenty of both when you use e-checks. Because there is less labor involved in processing all those transactions, there’s also less labor cost, so transaction fees are generally lower for e-checks – and your other banking fees are lower as a byproduct. Great for merchants and customers; awful for tellers and managers.
These savings aren’t just a drop in the bucket. According to PayPal, the processing fee for your average e-check ranges from 30 cents to $1.50; Aberdeen Group says the average cost of a paper check is $7.78, as quoted in multiple reports from 2018.
Con: Out of Sight, Out of Mind
There’s a good chance you’re receiving e-checks right now and you don’t even know it. If you’re on a direct deposit plan with your employer, that’s a form of e-check; if you’re getting your tax returns sent straight to your bank account, that’s an e-check.
Then you have the money heading in the opposite direction. Because these transactions happen relatively quickly compared to paper checks, you have to take extra care to ensure you’re not short of funds when you cut your e-checks. It’s easy to overlook these things when you’re not doing everything by hand.
As for the security of your e-checks, that’s both a pro and a con. You won’t lose them the same way you can lose a paper check, but you also have to practice safe finance while you’re online. Browse through our other banking articles here at Digital Wager Wire to find out more, and in the wise words of Jalen Rose, keep getting dem checks.
