Learn more about Check 21
Check 21 will accelerate the shift to
electronic processing.
Find out what it means for your business.
The "Check Clearing for the 21st Century Act," commonly referred to as Check 21, went into effect October 28, 2004.
Created in response to the events of 9/11, the new law is designed to improve the efficiency of the nation's payment system by encouraging the use of electronic check processing. That will conserve the nation's resources, reduce errors and more importantly, reduce fraud.
Check 21 may affect your business banking service in number of ways, primarily:
Expedited check clearing and posting – As more companies and financial institutions take advantage of electronic processing, checks will begin to clear faster.
Reduced risk of check fraud losses – Electronic processing allows banks and bank customers to access check images much faster, enabling them to identify potential frauds early and take immediate steps to prevent losses.
Check return – If you normally get returned checks in your statement, you may notice that you don't receive some checks back. This is because at some point in processing, your check was scanned and an electronic copy was created. However, you will always be able to retrieve a legal copy of your check if you need it – for example to verify a payment.
Check 21 does not affect the way you write or issue checks. However, you may want to consider taking some steps that could help your business operate more efficiently under Check 21:
Evaluate your check stock – Whether you print checks yourself or purchase check stock from an outside vendor, make sure it is of high quality so that it will image well. Also, if you use watermarks, check stock color, or background designs as fraud protection measures, these may not be effective in the new environment.
Evaluate how you manage cancelled checks – Many electronic alternatives are available. For example, you can view check images on CD-ROM with CompassView or online with Compass e-Access. In addition, our ACH (Automated Clearing House) services offer a variety of electronic fund transfer options that eliminate the need to write checks altogether.
These changes won't happen overnight, of course, but it's important for you to know what's coming — and why. To get a better idea of what Check 21 does and how it may affect you, please refer to the Check 21 FAQs.
