The number of checks presented electronically skyrocketed to 2.2 billion last year, a 114% increase from 1995, the General Accounting Office said Wednesday.
In a broad study of electronic check presentment, the GAO found that the Fed dominates the electronic check presentment business, controlling more than 99% of the market. It said nearly 14% of the 16 billion checks the Fed collected in 1997 were presented electronically.
The accounting watchdog questioned how widespread electronic check presentment would become. It noted that several bankers interviewed said they were worried that electronic check presentment would make it easier for criminals to cash forged checks because the paying bank would never see the signature on the draft.
Also, bankers told GAO investigators that there is no economic reason to switch to electronic presentment and noted that consumers preferred to receive their canceled checks with their statements.
The GAO also found that the two primary Fed electronic check presentment programs had little effect on the number of dishonored checks returned to local banks within the two-day limit set by law.
With electronic presentment, a clearing house only transmits the amount of the check and the account it is drawn from to the paying bank. The actual check is either stored at the clearing house or sent to the bank later.