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Significant Increase in Use of ECHEQs: They Already Represent 40% of Cleared Amounts

The use of electronic checks (ECHEQs) has posted a significant increase in 2021. It already represents 40.5% of total cleared amounts according to the latest data.

In June, 1,082,321 ECHEQs were issued and for more than ARS550,000 million, thus beating a record.

In turn, the amount of ECHEQs traded in the Argentine stock market doubled since January 2021, from 10,372 million to 22,253 million in June.

ECHEQs were launched by the BCRA in 2019 to simplify operations and reduce costs. It has been rapidly adopted and it is growing steadily.

To illustrate the progress made in the year so far, it is worth mentioning that physical checks represented 95.1% in April 2020, while electronic checks accounted for 4.9% of total cleared amounts.

In 2020, ECHEQs consolidated and grew at a faster pace during the preventive and social distancing stage, becoming one of the most important financing tools for small and medium-sized enterprises, as well as for financial inclusion.

Last year, more than 3.9 million electronic checks were issued and 2.8 million were deposited, and the number of institutions offering ECHEQ issuance services practically doubled.

A Key Tool for MSMEs

In addition to streamlining transactions and reducing costs for all players in the system, ECHEQs have a positive impact for micro-, small- and medium-sized enterprises (MSMEs) all over the country.

ECHEQs are a financing source particularly relevant for micro- and small-sized companies as their negotiation is easier—on a remote basis—, thus reducing operating costs, transportation costs, and verification of documents.

Moreover, ECHEQs reduce return reasons and potential fraud, as they cannot be altered or forged.

The BCRA has introduced new regulations to expand the use of ECHEQs because of their widespread adoption—with a significant growth in issuance and trading volumes. It further seeks to progress in the development of a robust and innovative instrument.

The authorization of Systemically Important Financial Market Infrastructures as ECHEQs managers in 2020 was a milestone. This measure made ECHEQs trade on the stock market easier and more effective.

An Innovative Instrument

ECHEQs are subject to the same regulations as paper checks, either conventional or deferred payment checks, and all banks must receive ECHEQs for deposit. Drawing an ECHEQ involves knowing the taxpayer identification number (CUIT) or employee identification number (CUIL) of the beneficiary. ECHEQs can be deposited in current or savings accounts. They can either be accepted or returned until its maturity date.

The main advantages of ECHEQs include:

- Simplification of ECHEQs' issuance, endorsement, negotiation, and transfer in general through digital channels.

- Unlimited endorsements.

- Reduction of operating costs compared to traditional checks.

- Greater security and effectiveness on account of its traceability.

- Less reasons for returning checks.

ECHEQs are part of the innovative measures adopted by the BCRA to strengthen the digital ecosystem of payments, such as 3.0 Transfers, interoperability of all QR codes, electronic credit invoices, as well as reduction of fees and the term for MSMEs to get paid for sales on credit cards.

Thus, the BCRA is creating the conditions to reach a more agile and modern payment system that may efficiently and safely replace cash.

August 7, 2021.

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