What are Demand Drafts?

At A2ZeCheckProcessing, we use Demand Drafts (also called Remotely Created Checks) to get your payments processed quickly and securely.

These came out of the FDIC’s Check 21 legislation. Check 21 stands for Check Clearing for the 21st Century Act. This federal law is designed to let banks handle more checks electronically. It aims at making check processing fast and efficient. Electronic Checks (eChecks) remove much of the costs of moving physical checks from bank to bank and reduce the time required to process.

And how do remotely created checks work? They use the account information and authorization from the account holder to create an electronic image of a check with the required MICR code. Since the customer authorizes the transaction online or over the phone, the check will not have the normal handwritten signature of traditional checks.

Next, the eCheck payment flows from the customer’s bank to the merchant’s bank for funding much like physical checks do, and will clear in the merchant’s account.

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