Check 21 Information

In October 2003, the Check Clearing for the 21^st Century Act became law.  Now known simply as Check 21, the new law will go into effect October 28, 2004. This act will improve the overall efficiency of the nation’s check payment system by eliminating the need to physically transport paper checks between banks.   Central National Bank would like to help familiarize you with how Check 21 will improve the way banks process checks.

What is Check 21?

Simply stated, Check 21 legislation allows banks to replace original paper checks with substitute checks that are made from digital images of the originals. 

Why was Check 21 created?

Check 21 allows original paper checks to be removed from the collection process.  Banks can send check images electronically, reducing dependence on transportation that can be impacted by uncontrollable delays, such as weather or natural disasters. 

What does a substitute check look like?

A substitute check is a paper reproduction of an original paper check.  A MICR line containing all the information on the MICR line of the original check makes it suitable for automated processing in the same way as the original.  It includes the legend:  This is a legal copy of your check.  You can use it the same way you would use the original check.  Here is an example of a substitute check. 

What is a substitute check?

A substitute check is created by a bank and is a paper reproduction of a digital image of an original check.  The substitute check contains an image of the front and back of the original check and conforms to banking industry standards for quality. 

Do I have to accept substitute checks as proof of payment?

Yes.  Once a paper check is converted into a substitute check, it becomes the legal equivalent of the original paper check.  Any bank or person must accept them as if they were the original checks. 

Which checks are eligible to become a substitute checks?

All checks are eligible for conversion to a substitute check including, but not limited to, consumer checks, money orders and travelers checks.

What happens to my original check?

Since there are no requirements governing the retention of original checks, they may be destroyed once digital images of the original checks have been made.  A substitute check made from the digital image becomes the legal substitute for proof of payment.  You may receive images of these substitute checks in your statement. 

Am I allowed to “opt out” of Check 21?

No.  Once Check 21 legislation goes into effect in October 2004, it will apply to financial institutions and their customers.  There will be no “opt out” exceptions. 

What other impact will Check 21 have on me?