19 June 2008
An eCheque is an electronic document which substitutes the paper document. Public key cryptographic signatures can be substituted for handwritten signatures.
Payers and payees can be individuals, small businesses, brokerages, corporations, governments or almost any other type of organisation. eCheques pass directly from the payer to the payee, so that the timing and the purpose of the payment are clear to the payee.
The payer writes an eCheque by structuring an electronic document with the information legally required to be in a cheque and digitally signs it. The payee receives the eCheque over email or web, verifies the payer's digital signature, writes out a deposit and digitally signs it.
The payee's bank verifies the payer's and payee's digital signatures and forwards the cheque for clearing and settlement. The payer's bank verifies the payer's digital signature and debits the payer's account. Like paper cheques, eCheques can bounce or be returned, for stop payment instructions, insufficient funds or accounts being closed.
Cryptographic signatures on every eCheque can be verified at all points, while in paper cheques, handwritten signatures can be verified at only one point.The eCheque system is designed with message integrity, authentication and non-repudiation features, strong enough to prevent fraud against the banks and their customers.
It is compatible with interactive web transactions or with email and does not depend on real-time interactions or on third party authorisations. It is designed to work with paper cheque practices and systems, with minimum impact on payers, payees, banks and the financial system
18 October 2008
Faster clearance is possible by using an e-cheque, which is an image of the real one. As a result, cheques will not have to be physically moved from the collection centre to the clearance centre, reducing both time and cost.
It’s called the cheque truncation system (CTS) and is favoured around the globe. For the last five years, the Reserve Bank of India has been working on implementing CTS to replace the current magnetic ink character recognition (MICR) technology, which requires physical movement of cheques.
Using CTS, if a cheque is deposited at a bank branch today, it will be cleared the next afternoon, instead of the three days it takes now.
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