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What is the Check 21 Act?
By now, you may have heard about The Check Clearing for the 21st Century Act, commonly referred to as Check 21. Check 21 is a federal law creating and governing the use of the substitute check. A substitute check is a paper replacement check created from the electronic image of an original paper check, and is the legal equivalent of the original check. Every U.S. bank will be required to accept substitute checks.
The Check 21 Act is an initial step toward more efficient and secure processing and clearing of checks. Currently, the check processing system relies on physically transporting paper checks from one location to the next. The Check 21 Act will foster the electronic processing of checks, decreasing processing time and transportation costs while reducing the likelihood of items being lost or destroyed in transit.
Check 21's effectiveness depends on clear digital images, so we strongly encourage the use of plain check stock and black ink to improve the legibility of the image.
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When does the Act take effect?
The Check 21 Act took effect on October 28, 2004.
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How does Check 21 affect me?
Those customers that currently receive cancelled checks, or check images, with account statements may receive substitute checks, or images of substitute checks, respectively.
The checks may clear faster, which may result in more frequent instances of insufficient funds.
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Additional Information and Frequently Asked Questions
Please refer to the following documents for more in-depth information on the Check 21 Act, as well as answers to frequently asked questions:
The Next Generation of Checks: The Check 21 Act
Check 21 in Detail
Frequently Asked Questions
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