What is Check 21?

Word Count= 493Word wrapped to 60 … feel free to publish this article in … or on your Web site (with Resource … is Check 21? Check 21 (the Check Cl

Word Count= 493Word wrapped to 60 characters-per-linePlease feel free to publish this article in yourNewsletter or on your Web site (with Resource BoxIncluded).What is Check 21? Check 21 (the Check Clearing for the21st 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, risksand costs associated with papercheck processing. Banks will be able to send digital images of checks electronically, eliminating the needto physically transport paper checksbetween banks. Clearly there willbe substantial costs and time savingsto the banks.What is a substitute check? A substitute check is a paper copy ofthe 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 standardizesquality and allows for substitute checksto be legal copies of the originals. Are substitute checks an acceptableproof of payment? Yes, everyone must accept substitutechecks beginning Oct. 28. How will Check 21 impact me? DO NOT count on float time for your checkto 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. Checkprocessing will be faster with the implementation of Check 21. Funds may beremoved from your account sooner thanin 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 becreated. Since substitute checks arelegal 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 dollarson their operational costs. Merchant may see faster funds availability but manywere already seeing quick funds availabilityusing paper checks. Consumers lose the float.So “suprisingly” the banks are the realwinners.For more information visit http://www.aba.com or http://www.nacha.com——————————————————ABOUT THE AUTHOR: ——————————————————** If you choose to use this article please be kind enough to email me at articles@ach-payments.comwith the word “Article” in the subject.

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Substitute Check, Substitute Checks, Original Check


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