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What is Check 21?

Check 21 (the Check Clearing for the 21st Century Act) allows banks to replace original paper checks (source document) with digital copies of the originals.

Why was Check 21 created?

Check 21 will reduce the time, risks and costs associated with paper check processing. Banks will be able to send digital images of checks electronically, eliminating the need to physically transport paper checks between banks. Clearly there will be substantial costs and time savings to the banks.

What is a substitute check?

A substitute check is a paper copy of the digital image of your original check, called the source document - both front and back, with all endorsements -and is about the size of a business check. Check 21 legislation standardizes quality and allows for substitute checks to be legal copies of the originals.

Are substitute checks an acceptable proof of payment?

Yes, everyone must accept substitute checks beginning Oct. 28.

How will Check 21 impact me?

DO NOT count on float time for your check to clear. Funds will be removed from your bank account much sooner than a paper check. If you receive your canceled checks with your statement, you may receive a mix of substitute checks and original checks. If you don't receive your checks back now, you may not notice any change. Check processing will be faster with the implementation of Check 21. Funds may be removed from your account sooner than in today's system.

What happens to my original check?

After making a digital image, the bank may destroy your original check. If necessary, a substitute check may be created. Since substitute checks are legal copies of your original check, there is no need to save the original.

What if I need a copy of a canceled check?

Your bank will produce a copy for you.

How does Check 21 relate to electronic check conversion (e-check)?

Check 21 involves creating digital images of original checks, but are still processed under the same laws and regulations as paper checks. On the other hand, electronic check conversion, or e-check, occurs when a check is converted into an electronic funds transfer. The transaction is then routed through the Automated Clearing House (ACH) network.

Who wins?

THE BANKS! Banks will be saving big dollars on their operational costs. Merchant may see faster funds availability but many were already seeing quick funds availability using paper checks. Consumers lose the float. So "suprisingly" the banks are the real winners.

For more information visit http://www.aba.com or http://www.nacha.com

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