The only difference between normal paper cheques and electronic cheques is that e-cheque is an online and virtual version. Conversion here means transforming the paper cheque to an electronic one. The information given by you in paper cheque is used for extracting bank name, payer’s name, account number and other such information. Once this is done, there is a single time electronic money transaction from your account to beneficiary.
There are numerous advantages and disadvantages of e-cheques:
Advantages of e-cheques:
The conversion is absolutely electronic and hence, the process includes electronic scanning to money transfer. So, there is very less amount of human intervention in this process which results in reduced processing fee. You end up saving about 60-70% of the fee that you may be paying through paper cheques.
Conversion is very easy and all it requires is scanning of physical cheque and all the details would be read.
The laws and regulations related to e-cheques are absolutely similar to that of paper ones and those of electronic money transfers. This makes this method a secured and safe one.
While the software employed for this system are highly advanced and leading ones, it also results in lesser usage of physical resources that are consumed for transfers of paper cheques to make funds transfers.
Disadvantages of Electronic Cheques:
E-cheques can be processed and accessed using specific equipments that ask for investments from financial institutions who offer this system. The investment would directly depend on the size of institution.
Unauthorized transactions can give you a great pain, in case of any information breach. So, maintaining paper cheque records is even hectic, but has to be done for surety.
Since the transactions are dependent on networking, any fault in it will delay the transfer. This means that for successful transfer to take place, the system has to be working all the time. But, is it really possible?