E-check or electronic check
An e-check is a check that can be drawn, endorsed, guaranteed, negotiated, placed in custody, assigned and deposited electronically.
All banks must receive e-checks for deposit. Drawing an e-check involves knowing the taxpayer identification code (CUIT) or employee identification code (CUIL) of the payee. E-checks can be deposited in current or savings accounts. They can either be accepted or returned until their maturity date.
E-checks involve three stages: issuance, management and deposit. Issuance and deposit are exclusively carried out by financial institutions, while management can be conducted by financial institutions and systemically important financial market infrastructures (FMIs) authorized by the BCRA.
A manager deals with notices, notifications, inquiries, giving back e-checks, endorsements, recording of guarantees, among others. In the case of micro-, small-, and medium-sized enterprises (MSMEs), an e-check is an easy financing option as it speeds up the transfer, discount and negotiation processes.
E-checks are subject to the same regulations as paper checks, either conventional or deferred payment checks, to the extent that such regulations are not in conflict with those specific for e-checks.
For more information, see the Consolidated Text on Regulations on Bank Current Accounts and the Consolidated Text on the National Payment System – Checks and Other Cleared Instruments.
Financial institutions, FMIs acting as managers or carrying out e-check custody/registration tasks for exchange trading, and the automated clearing house COELSA SA—as administrator of the storage system—executed an agreement that establishes their responsibilities in e-check transactions.
E-check features and advantages:
- – Simplification of issuance, endorsement, negotiation and circulation through digital channels.
- – Unlimited endorsements allowed.
- – Issuance in US dollars (USD) allowed.
- – Reduction of operating costs when compared to traditional checks.
- – Greater security and effectiveness.
- – Less reasons for returning checks.
- – Enhanced traceability.
- – E-checks can be used by mutual agreement of a financial institution and its customer.
- – The low-value automated clearing house runs and manages the e-check storage system. This storage system keeps a record of every e-check’s status.
- – E-checks can be drawn, endorsed, guaranteed, endorsed for negotiation, deposited and placed in custody.
- – In principle, only bank account holders can receive an e-check.
How to draw an e-check
You only need to know the CUIT, CUIL or identity code (CDI) of the payee, unlike transfers, for which a single banking code (CBU) or alias is required. The reversal of the issuance of an e-check can occur by way of cancellation if the e-check has not been accepted by the payee yet, or, if already accepted, by way of a request to have it back. Only current account holders can draw e-checks.
How to deposit an e-check
Deposits are made through a platform made available by a financial institution. After accepting an e-check, payees may deposit it in any of the financial institutions where they hold an account; the e-check can be viewed on the platforms of all such institutions. E-checks clearance time is the same as for paper checks: 48 hours.
I have received an e-check. What should I do?
You can either accept it or refuse to accept it. If you accept it, you can place it in custody at a financial institution to handle the deposit on the payment date, or you can endorse it, discount it, request guarantees or negotiate it in a regulated market.
What should I do if an e-check is returned?
A returned e-check can be given back upon request of any endorser in the endorsement chain, the guarantor or the drawer, in order for the parties involved to reach an agreement, that is, to negotiate the payment with any of the parties of the endorsement chain. You can also assign the e-check to a third party outside the chain by an “electronic assignment of rights.” Ultimately, you can request a printed certification to file civil actions. Such certification is printed by the bank branch with a “view code,” which will allow the holder or rightful third party, and commercial courts to verify its truthfulness on this website. Payment agreements between the parties must be made electronically, with the alternatives described above and before printing the certification to file civil actions; otherwise, once such certification is printed, e-checks cannot be given back or electronically assigned.
How to negotiate an e-check
There is the “endorsed for negotiation” option in the platform made available by financial institutions or managers. By clicking on that option, the e-check enters the exchange market through the FMI chosen. FMIs are authorized by both the BCRA and the National Securities Commission (Comisión Nacional de Valores, CNV) to provide e-check registration/custodial services.
From then on, e-checks have the same negotiation scheme as paper checks. E-checks result in a significant reduction in operating costs in the absence of physical delivery.