ECC - Electronic Cheque Clearing Unit
Launch Date: November 2007
System Participants: Banks
Key Service: Processing cheque payments
Cheques are a written "order to pay" that is issued and signed by a person/entity and given to another person/entity as payment. Through the cheque, the issuer instructs their bank to withdraw money from their account and deposit it in the account of the cheque recipient. The process of reading and transmitting the cheque data to complete the financial transaction is called cheque clearing. Electronic cheque clearing is the process of converting an original paper cheque into an image for electronic processing of the financial transactions between banks. It entails transmitting data, pictures, and cheque codes via the Electronic Clearing Center and calculating the net balances that arise from this procedure at a particular moment.
The Electronic Cheque Clearing Unit was launched in November 2007, building on previously-existing automated cheque clearing services and further offering enhanced clearing that allows collecting cheques on the same day at the bank level.
Cheques are a prominent payment instrument in the Jordanian economy. More than 7 million cheques are used annually in Jordan, with their value exceeding 35 billion JOD. Given their importance in financial transactions, the Electronic Cheque Clearing Unit is considered a key pillar in the financial ecosystem.
Benefits of implementing Electronic Cheques Clearing Unit:
With the introduction of a fully electronic solution that is equipped with advanced communication capacity, the ECCU has helped improve the accuracy of transmitted information through cheques and reduce their processing time. Clearing of cheques can be done on the same day regardless of the geographical location of the bank branch. With the automation of cheque reading in an end-to-end secure manner, the ECCU has eliminated risks associated with transferring paper cheques physically between banks, significantly reducing transportation and manpower costs, as well as cheque loss and fraud risks. The system works 24-hours a day and therefore offers a stretched timeframe for sending cheques regardless of their volume. The system further enables verifying in advance the financial position of the issuing bank to ensure the smooth and efficient transfer of funds. In addition, its archiving and reporting capabilities have been enhanced, making it easier to monitor and improve data analyses.
For financial customers, collecting cheques on the same depositing day has become possible through the accelerated processing time, meaning that crediting the cheque amount in the beneficiary’s account can take place on the same day, based on the depositing time. Moreover, customers can also be informed of whether the cheque is accepted or rejected on the same day. These services have contributed to increasing confidence in cheques as a payment instrument and increased customer satisfaction, which has translated into growth in cheque usage and acceptance in Jordan in the past decade.
The legal framework of the ECCU operations
The ECCU operations are governed by the Central Bank of Jordan Law, the Electronic Transaction Law, and the rules, instructions, and regulations governing the work of Electronic Clearing in Jordan.