DEFINITION of 'Check Conversion'

A reformatting service offered by banking merchants. Check conversion allows banks to convert paper checks into electronic ones and then send them to the appropriate receiving bank. The electronic check is forwarded on via the automated clearing house.

BREAKING DOWN 'Check Conversion'

This service is popular with merchants because it allows them to clear the checks they get much more quickly. The quickness of the electronic format eliminates much or all of the time spent waiting for a traditional paper check to clear. Furthermore, electronic checks are always processed before paper ones. This service is also known as accounts receivable conversion.

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