Wal-Mart lets Web shoppers pay by check

The retail giant said it is allowing shoppers to use encrypted checks for purchases at its Web site, Walmart.com. Once customers choose "pay by check," they will be required to provide personal information as a safeguard, company spokeswoman Cynthia Lin said.

"People have been asking for (electronic checks) for some time now and we've been working to make them available," said Lin, who noted customers were previously allowed to use only major credit cards and Wal-Mart store cards to make online purchases. "We expect to have many people paying with checks online, like they do in our stores."

Online retailers are becoming more comfortable with offering electronic checks as an alternative to credit cards, third-party payment services and bank debit cards in making online payments, industry watchers say.

Electronic checks tend to attract people who do not have credit cards or debit cards, or prefer to play the float that checks provide, said Mary Waggoner, vice president of investor relations for Certegy, which provides electronic check processing for Wal-Mart.

Wal-Mart will ask customers to select a desired payment method. Once the "pay by check" option is selected, customers need to enter the name of their bank, account and routing numbers, drivers' license information, address and their name, Lin said.

Wal-Mart plans to continue accepting debit cards, credit cards and Wal-Mart store cards for online purchases, Lin said. Earlier this year, Wal-Mart and several other notable retailers reached a $1 billion settlement with MasterCard in a dispute over the fees they were charged by the credit card processor for handling debit cards.

Waggoner noted electronic checks allow customers to issue payment a day or so before the funds come into their account to cover the check, otherwise known as "floating" a check. But online debit card payments draw down a customer's checking account immediately.

Consumers are gaining an affinity for using both electronic checks and debit cards when making online purchases. Visa USA, for example, has found that 35 percent of its e-commerce transactions are conducted with a debit card, spokeswoman Camille Lepre said.

She added Visa USA's version of an electronic check is a debit card that can be used as a charge card. "It's similar to electronic checks. It receives its funds from the same bank account and offers greater protections (for security)," Lepre said.

Electronic checks are gaining traction, as well, Waggoner said. She added: "We now have 75 clients from Wal-Mart to specialty stores to apparel stores to electronics makers like Gateway and Dell. Last year, we did $1.3 billion in check transactions over the Internet and phone--that was up 37 percent from the prior year."