HERNDON, VA. - Nacha, the electronic payments association, announced Monday that 24,600 retail sites in the nation converted check payments at the point of sale into electronic funds transfers this January, up 400% from the year earlier.

Nacha, which has developed rules to support such transactions, said more than 1.5 million checks were converted during January. The association said it expects 25 million checks to be converted, or truncated, this year.

Merchants convert checks to speed up the collection of paper payments and reduce transportation costs associated with depositing items. Banks are interested in offering the service to merchants.

"Retailers are realizing that they can lower their check processing costs by converting paper checks into automated clearing house debits," said Stephen A. Schutze, chairman of Nacha's electronic check council and director of eStrategies at the American Bankers Association.

In an electronic check conversion, a check is scanned at the point of sale and the merchant initiates an automated clearing house debit but only after a customer has signed a credit card-like receipt to authorize it. After authorization, the check is marked "void" and returned immediately to the customer.

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