In line with the greater use of digital means of payment, more and more companies and individuals are choosing e-checks over traditional paper checks. Indeed, the use of e-checks has experienced steady growth and has gotten stronger among most bank customers in the past few months: the amount of e-checks cleared now represents 57.9% of the ARS2.03 trillion cleared on a monthly basis.
The share of e-checks in the total amount cleared is not only at its highest since their implementation in June 2019, but it is almost twice as much as the 30.9% share recorded two years ago. These figures were obtained from the latest Monthly Report on Retail Payments prepared by the BCRA. According to this report, the e-check amount cleared from March has always stood above 50% of the total.
The use of e-checks, encouraged by the BCRA to streamline transactions, reduce costs and promote greater financial inclusion, occurs against a backdrop of historic lows in the number of checks returned for insufficient funds. Particularly, there were 102,532 returned checks in October, 36,979 of which were returned for insufficient funds, which accounts for just 0.75% of total cleared checks (4.9 million) and 0.59 % of total cleared amounts (ARS2.03 trillion).
In the past 12 months, the average of returned checks was 105,640; the rate of checks returned for insufficient funds over cleared amounts was 0.64%. This rate is also below historic levels, which are above 1%.
Also, in the 12 months prior to the beginning of the preventive and compulsory social isolation (aislamiento social preventivo y obligatorio, ASPO) there was an average of 202,600 returned checks per month—the rate of checks returned due to insufficient funds over cleared checks standing at 1.14%. The rate rises to 1.35% when considering the 24 previous months.
The greater relevance of e-checks over traditional paper checks was observed in both amounts and volume. In fact, 1.58 million e-checks were cleared out of a total of 4.9 million checks in October—this means 32.3% of the total. This percentage is higher than the historical series and is three times higher than the 11,3% recorded two years ago, accounting for the share of e-checks in the total cleared.
Although the digital transformation process started by many companies contributed to a greater uptake of this instrument, one key factor was the BCRA action to develop a robust and innovative product, with more and more features.
In this sense, alongside the implementation schedule prepared by the BCRA that served as a roadmap of the e-check in the financial system, the authorization of systemically important financial market infrastructures in 2020 as e-check processors was of paramount importance, as it made the stock-exchange negotiation of the instrument easier and more efficient.
The BCRA seeks to develop and strengthen the use of e-checks to modernize the payment system and improve the quality of the financial system, two cornerstones of financial inclusion.
The operation of e-checks is subject to the same rules as paper checks, and all banks are required to receive and deposit them. Drawing an e-check involves knowing the taxpayer identification code (CUIT) or employee identification code (CUIL) of the beneficiary. E-checks can be deposited in current or savings accounts. They can either be accepted or returned until their maturity date, and may be endorsed without limit.
E-checks are a financing source particularly relevant for MSMEs across the country as their electronic and remote negotiation is easier, thus reducing operating costs, transportation costs, and verification of documents. Moreover, there are fewer reasons for bouncing an e-check and potential fraud is minimized, as this electronic instrument cannot be altered or forged. E-checks can also be traced, which makes them safer and more effective than traditional checks.
E-checks are part of the innovative measures adopted by the BCRA to strengthen the digital ecosystem of payments, such as 3.0 Transfers, the 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.
