The New York Clearing House Association has mandated that member banks be able to present checks electronically by July 30.
Also, by Feb. 1, 1996, the clearing house is pushing member banks to send return notifications 24 hours earlier than they now do. The February deadline will enable banks to "learn about pending return items before noon of the day following transmission," said Henry Farrar, senior vice president with the association.
The moves by the clearing house "add teeth" to guidelines for participation in the New York Clearing House Electronic Check System project, or Checcs.
Checcs is a nearly three-year-old electronic presentment service that allows banks to send cash letter data electronically in advance of the actual checks.
"It just means that we are really serious about this," said Mr. Farrar, adding that the moves were motivated by a desire to get more volume and full participation among member banks.
There are 20 banks voluntarily involved with Checcs, which handles a million items daily. But Mr. Farrar said that several members were not capable of electronic check presentment yet and others were not adhering to regular presentment schedules.
"New York members understood that there would eventually be full participation in the program, but people get distracted, which happens with mergers and so forth," Mr. Farrar said. "We felt we needed to put some teeth into this."
Electronic presentment systems have been around for several years. Banks typically have no qualms about sending check data electronically. But many are reluctant to act on it when receiving because they would rather not assume the risk of posting the data to accounts early, only to be unable to reconcile them when the paper items arrive.
But bankers say the benefits of electronic check presentment - including improved fraud detection - are persuading many institutions to get more involved.
