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The Check Clearing for the 21st Century Act, also known as Check 21, goes into effect nationwide on October 28, 2004. This key legislation will improve banking in the United States, making check processing faster and more consistent, as well as open the door for banks to innovate, become more efficient and add value for customers.
What is Check 21?
Why was Check 21 legislation created?
What does this new legislation mean?
What are the primary benefits of Check 21?
Is Check 21 a direct result of the events occurring on September 11, 2001?
What does Check 21 mean to me as a U.S. Bank customer?
How does Check 21 affect U.S. Bank customers?
Does Check 21 only impact U.S. Bank customers?
Are there any checks exempt from Check 21 legislation?
What is a substitute check and what will it look like?
How am I assured that U.S. Bank will not charge my account for both an original and a substitute check?
Will I still have the option to receive my cancelled checks with my monthly statement?
How will the check payment process change as a result of Check 21?
Why was Check 21 legislation created?
Check 21 legislation was created to facilitate check truncation and foster innovation in check collection systems, while improving the overall efficiency of the nation's payment system. Check 21 creates a new negotiable instrument called a "substitute check."
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What does this new legislation mean?
Check 21 provides the legal basis for banks to choose to transport checks electronically, making it less dependent on the physical transportation of checks. It will allow banks to process checks by allowing them to electronically capture and transmit an image of the check.
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What are the primary benefits of Check 21?
While the effects of Check 21 on banking will be very gradual, over time, you may see the following benefits:
- checks and deposits will clear faster and more consistently.
- retrieving copies of checks and other documents will be easier.
- an enhanced customer banking experience as a result of additional image technology.
- some cancelled checks returned in your statement may be replaced by substitute checks (a paper reproduction and legal equivalent of an original check).
- new products and services that will help you better manage your finances.
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Is Check 21 a direct result of the events occurring on September 11, 2001?
No. Check 21 legislation was first crafted in 1998, but the events of September 11 reinforced the need to develop better technology that allowed the movement and transportation of checks around the country.
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How does Check 21 affect U.S. Bank customers?
Check 21 allows our customers better access to information through the development and leveraging of image technology, something U.S. Bank is actively pursuing. It also makes retrieving copies of checks and other documents more convenient, while providing customers with an enhanced banking experience. Learn more about how U.S. Bank customers will be able to take advantage of image technology.
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Does Check 21 only impact U.S. Bank customers?
No, the legislation is broad in scope and covers all banks and all customers within the United States.
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Are there any checks exempt from Check 21 legislation?
All checks, except foreign checks, are eligible to become substitute checks, including, but not limited to, the following:
- Consumer checks
- Business checks
- Corporate checks
- Government warrants
- U. S. Treasury checks
- Money orders
- Controlled disbursement checks
- Payable through drafts
- Traveler's checks
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What is a substitute check and what will it look like?
Check 21 creates a new negotiable instrument for banks called a substitute check. A substitute check is a paper reproduction of an original check and is a legal equivalent of an original check for all purposes, provided the following:
- contains an image of the front and back of the original check;
- bears an MICR line (the encoded line of information for bank processing) containing all the information appearing on the MICR line of the original check, except as provided under generally applicable industry standards for substitute checks to facilitate the processing of substitute checks (regulations are still under advisement at this time);
- conforms, in paper stock, dimension and otherwise, with generally applicable industry standard for substitute checks; and
- is suitable for automated processing in the same manner as the original check.
A substitute check must also include information identical to the information on the original check. The bank that creates the substitute check must warrant that the check meets the requirements of being a legal equivalent of the original check. The substitute check must also bear the following legend:
This is A LEGAL COPY of your check. You can use it the
same way you would use the original check.
The bank that creates a substitute check may process the check under normal paper-based check processing procedures.
View an example of a substitute check.
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How am I assured that U.S. Bank will not charge my account for both an original and a substitute?
Today, all banks guarantee under normal banking regulations that they will not charge a customer's account twice for the same transaction. Check 21 legislation also addresses those same banking regulations. They are called warranties and indemnities in the Financial Industry. A customer will not be charged for an original check and again for a substitute check.
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Will I still have the option to receive my cancelled checks with my monthly statement?
Yes. U.S. Bank customers will still have the option to receive check return as part of their monthly statement. Upon implementation of Check 21, U.S. Bank customers choosing check return may begin to see a mix of original checks and substitute checks in their statements. This will occur very gradually over time.
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How will the check payment process change as a result of Check 21?
Today, banks receiving deposited checks from customers are required to deliver the original paper checks to the paying bank for payment. Check 21 makes the financial system less vulnerable to man-made or natural disasters that disrupt physical transportation networks.
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