E-CHEQUES

E-Cheque
•Cheque is an electronic document which
substitutes the paper check for online
transactions.
•Digital signatures (based on public key
cryptography) replace handwritten
signatures.
Working of E -Cheques
•Payers and payees can be individuals, businesses, or financial institutions
such as banks. E- Cheques are transferred 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 e-Cheque by structuring an electronic document with
the information legally required to be in a cheque and digitally signs it. 
The payee receives the e-Cheque 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
then forwards the cheque for clearing and settlement  The payer's bank
verifies the payer's digital signature and debits the payer's account
Benefits of E-Cheques
•TO CUSTOMERS;
• No physical movement of cheques so no fear of loss of
cheque in transit.
• Quicker clearance; within 3-4 working days.
• Its more secured than physical cheques.
• Decrease errors and fraud. eCheques reduce the potential
for errors and fraud because fewer people handle them.
• They can serve corporate markets. Firms can use them in
more cost-effective manner
Benefits to Bank
•Reduce the risk associated with paper clearing
•Superior verification and reconciliation process
•No geographical restrictions
•No physical movement of cheques- it saves cost and time for banks.
•No chance of cheque dishonor- The risk is taken care of by the
accounting server, which will guarantee that the cheque would be
honoured.
•Well suited for clearing micro payments
•Reduce processing costs by up to 60%
DRAW BACKS
• Customer education
•Chances of misuse, hacking etc
•Need a different infrastructure
•Unauthorized transactions becomes
challenge for banks
•In India the e-cheque facility is now replaced
by CTS- Cheque Truncation System 2o1o.
Where there will be a physical cheque which
will be converted into e-cheque by scanning
and transferred for clearance. And the time
taken for clearance is 24hr