An eCheck is an electronic version of a paper check. It uses the same legal and business protocols associated with traditional paper checks - it can be used in any transactions where paper checks are used today - yet it capitalizes on the speed and processing efficiencies of all-electronic payments.
The technology used to standardize the implementation of eChecks was developed by the Financial Services Technology Consortium (FSTC), whose eCheck project is currently being used by the United States Treasury in a two-year pilot program. eChecks are based on the Financial Services Markup Language (
FSML, the markup language developed to allow eCheck technology into the marketplace.
The FSTC's eCheck technology takes the basic, and nearly ubiquitous, <TERM></TERM>concept and applies it to a markup-language-based document, thereby recognizing the need for basic signing, co-signing, and countersigning or notarizing. eChecks also utilize several different state-of-the-art security techniques including
authentication,
public key infrastructure, and
certificate authority in order to ensure the integrity of each electronic transaction.
The path an eCheck takes looks something like this: the payer writes the eCheck on a computer, signs it, and e-mails it over the Internet. The payee receives it, verifies signatures, endorses it, writes a deposit slip, and signs it. The endorsed check is then sent by e-mail to the payee?s bank for deposit. Bank personnel verify signatures, credit the deposit, and then clear and settle the endorsed eCheck by sending it on to the payer's bank, where signatures are once again verified and the amount of the eCheck is debited from the payer's account.
The cryptographic certificates used with an eCheck enable a check payee to determine the validity of the signatures. Initially, these certificates are actually transmitted with the eCheck, but alternative models where the transmission, or possibly even issuance, of the certificate is not required are currently in the making. eCheck technology also allows digital signatures to be applied to document blocks, rather than to the entire document. This allows parts of a document to be separated from the original, without compromising the integrity of the digital signature.