Check 21
Check 21 (The Check Clearing for the 21st Century Act) was passed as a federal law,
on October 28, 2004. It is a means of streamlining the nation's check processing system.
Check 21 is intended to reduce the time and cost associated with the physical transportation of
paper checks between banks. It will also reduce the vulnerability of the check payment system to
disruptions, such as extreme weather or natural disasters. Tri Counties Bank has prepared the
following questions and answers to keep you better informed. Please also take a
moment to read our Check 21 newsletter and Checks are Changing brochure located at the bottom of
this page. If you have any further questions, please call one of our bankers at 800-922-8742.
Frequently Asked Questions
What does this new law do?
Check 21 allows all banks to replace the original check with a paper reproduction (front and back).
This reproduction, called a substitute check, is created from a digital image of the original,
contains the same information, and becomes the legal equivalent of the original check.
What's the purpose of Check 21?
The stated objectives of the legislation are to:
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Increase the speed of check clearing in the United States
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Lower check processing system clearing costs
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Reduce the vulnerability of the check processing system to disruptions in air and ground
transportation
Why is Check 21 important?
After the events of September 11th, when air traffic in the United States was grounded, the
importance of being less reliant on transportation became apparent. Check 21 was proposed
by the Federal Reserve as a solution to keep funds flowing, even when air and ground
transportation is halted. As a result of Check 21, banks will no longer have to transport
original checks - substitute checks can be printed and presented in locations different
than where the original checks were first deposited.
How will Check 21 change the way checks are processed?
The current check processing system is reliant on transportation logistics and weather
conditions, which can adversely affect the exchange of original checks between banks for
payment. Check 21 allows banks to use digital image files of the original paper checks to
settle check payments electronically, thereby reducing reliance on physical transportation.
The digital images can be converted to substitute checks, if a substitute check is needed
for any reason.
Do all financial institutions have to comply with Check 21?
All financial institutions must have been in compliance with the federal law, effective October 28, 2004.
Does a substitute check image have the same legal standing as an original check?
As long as the substitute check conforms to the guidelines established by Check 21, the
substitute check becomes the legal equivalent of the original check. In the event of a
discrepancy, vendors and banks are required to accept the substitute check as proof of
payment.
What does a substitute check look like?
A substitute check is a paper reproduction that replaces the original check. A substitute
check includes an image, front and back, of the original check and is the legal equivalent
of the original check. Please click here for a sample of the front and back of a
substitute check. Notice that the substitute check includes all the
information on the original check and contains the statement: "This is a legal copy of
your check. You can use it the same way you would use the original check."
What if there is an error involving a substitute check?
If you think there is an error, contact us immediately at the customer service phone
number listed on your statement.
What if I need a copy of a substitute check?
You can obtain a copy the same way you would any check: through Online Banking, by calling
us at the customer service phone number listed on your bank statement or by visiting any
of our branches.
If I normally receive returned check images with my statement, what will be returned under Check 21?
The government has not mandated that banks convert all paper checks into digital images or
substitute checks. Therefore, not all the checks you write will be converted into substitute
checks. The transition is expected to be a gradual process. If you currently receive your
paid checks as images with your account statement, after October 28, you may begin to notice
a combination of original and substitute checks within these images.
How will Check 21 affect me?
You can continue banking with Tri Counties Bank as you do today. If you currently request check
copies or view images online, you'll start seeing substitute checks or copies of substitute checks.
If you currently receive your canceled checks via image with your account statements, you may get
original check images, substitute check images, or a combination of both with your statements.
This will become more and more common as other banks start to incorporate substitute checks
into their processes.
Can customers do anything to help ensure better images?
Yes, they can help banks retain a clear digital image of their original check by writing their
checks using a standard ink pen with black or blue ink. "Gel" pens and colored ink pens do not
image well. Self-inking endorsement stamps should also use black ink if possible as the color
black provides the best quality digital image.
Who will be responsible for images that are unreadable?
Under Check 21, the creator of the substitute check will be responsible. Image quality is very
important to Tri Counties Bank, and we've instituted safeguards to ensure a clear image is captured.
What if I am not comfortable with this new check processing system? Can I opt out of Check 21?
No, you cannot. Once Check 21 legislation went into effect on October 28, 2004, it applies to
all financial institutions and their customers, with no exceptions. We understand that Check 21
legislation introduces new processes that will take some adjustment. Tri Counties Bank can assure
you, however, that we have been investing in imaging technology for a number of years to prepare
for industry conversion to electronic processing. Many of our customers are already benefiting
from this investment by opting to receive image statements on paper or check images online.
If you are interested in receiving image documentation, please contact us at 1-800-922-8742.
Do merchants need to purchase any special equipment for Check 21?
No, banks are the ones governed by this law because they are the entities that process or
clear the checks either via paper means or via electronic means.
Check 21 newsletter
For additional information, please take a moment to read our
Check 21 newsletter.
