Summary: The Expedited Funds Availability Act, enacted in 1987, limits the time that banks can hold funds deposited into customers' accounts before the funds are to be made available for withdrawal. Concerns about both check fraud risk and depositors' access to funds have heightened interest in how technology can potentially speed up the return of checks dishonored because of insufficient funds, fraud, or other reasons, while continuing to allow ready access to deposited funds. This report provides information on the current role of electronic check presentment (ECP) in the collection process for "interbank checks"--checks for which the depository bank and the payment bank are not the same entity. With ECP, the check is presented electronically to the paying bank by transmission of the magnetic ink character recognition line data at the bottom of the check, which identify the routing number of the paying bank, the check number and amount, and the customer's account number. With ECP, the paying bank must decide whether to honor the check, or have the check returned to the depository bank, upon receipt of the electronic data rather than the paper check. This report (1) identifies and describes ECP offered to U.S. banks, (2) determines ECP volume in the United States for 1995 through 1997, (3) determines whether ECP affects the length of time that it takes for a dishonored check to be returned to the depository bank, (4) identifies any factors that may limit ECP use, and (5) determines how ECP may affect banks' risk of check fraud.
