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About Check 21
In the past, paper checks had to be physically moved from where the check was deposited to the financial institution that paid the check. This process could take several days, sometimes weeks, to complete. But the wait — and the cost of moving checks — has decreased since Check 21, a federal law for financial institutions that took effect October 28, 2004.
Check 21 doesn’t change the way people or businesses write checks. Instead, it impacts how checks are processed by financial institutions. By enabling financial institutions to scan paper checks and send images for electronic processing, Check 21 creates more efficient ways to process checks.
Check 21 Myths & Realities
The first step to understanding Check 21 is to identify facts and common misperceptions about the legislation. For example, a common misperception is that Check 21 requires check imaging or that all financial institutions must accept checks electronically. In reality, Check 21 simply provides new options for check processing.
Common Myths about Check 21
- The legislation mandates the use of check imaging.
- Check 21 authorizes image exchange.
- Retailers are required or mandated to handle check conversion at the point-of-sale.
- Check 21 mandated the adoption of new check security features.
Check 21 Realities
- Checks aren’t going away. Check 21 supports the use of checks by creating a more efficient processing system.
- With a more streamlined process, checks clear faster.
- Check 21 helps financial institutions detect check fraud more quickly.
- Check 21 changes have been gradual because check imaging and electronic image exchange require long term planning.
For more information on Check 21, visit Tools and Resources.
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