Electronic Check Definition

An electronic check, like a paper check, is a promissory note for payment. An electronic check instructs a bank to pay a specific amount of money out of a specific account. Electronic checks vary from paper checks only in the manner in which the information is conveyed-electronic checks use computer networks in place of a paper check. Because electronic processing is much cheaper and less error-prone, electronic checks are generally preferred to paper checks in the world of finance; in fact, using a process known as "check truncation", many paper checks are partially converted to electronic checks for ease of processing. A consumer that knowingly or deliberately issues a bad electronic check is considered to have engaged in a type of theft.