The Federal Reserve is working with trade and consumer groups on draft legislation aimed at increasing the use of electronic checks, the Fed said yesterday.
Current law often requires original handwritten checks to be transferred between banks, unless the banks involved have agreed to transmit check information electronically. Fed vice chairman Roger Ferguson said difficulties in getting large numbers of banks to sign such agreements have slowed down the process of presenting checks for electronic payment.
Under the draft legislation, banks could substitute a machine-readable digital copy of a check that would be the legal equivalent of the original paper document.
Ferguson said the law would allow banks more flexibility and could increase the number of banks that accept electronic checks for collection and presentment.
