Check 21

Paper checks used 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. The wait - and the cost of moving checks - has decreased since Check 21 legislation was introduced.

Check 21 didn't change the way people or businesses write checks. Rather, it impacted how financial institutions process checks. By enabling financial institutions to scan paper checks and send images for electronic processing, Check 21 created more efficient check processing.

Here's how it works:

Once a check is deposited, financial institutions create an electronic image of the check and transmit the image to another financial institution for processing. The image may be exchanged electronically or on paper using a substitute check. Check 21 provides the rules and guidelines for the use of substitute checks and protection to those who may receive a substitute check.

Substitute checks can be used for record keeping or proof of payment the same way as the original check. Check 21 provides a refund procedure for a person who receives a substitute check with an issue or account error. Every financial institution will provide information about how this new refund procedure works.

Check 21


What Check 21 Means to You

For Financial Institutions

Because financial institutions are required to accept substitute checks from another bank or credit union, Check 21 affects every financial institution. They must understand and adapt to these regulations and requirements, and make the necessary adjustments to their check processing system.

  • Ensure image quality and compatibility
  • Implement changes to account statements and check processing
  • Implemented procedure for handling errors and returns

For Consumers

With Check 21 consumers won't see a difference when they write checks, but they'll notice the effects of processing changes under Check 21:

  • Checks clear faster. For example, a check deposited in New York from a bank in Los Angeles may be posted in a matter of hours instead of days.
  • With faster check clearing, financial institutions may be able to detect fraud quicker.
  • Consumers have more options for electronic viewing of bank statements.

For Businesses

Check 21 does not require businesses to change the way they make deposits or accept checks from customers. All checks drawn on U.S. financial institutions are eligible for electronic processing with Check 21. Businesses may see changes like:

  • Faster return and collection of checks.
  • Quicker access to revenue from customers who pay by check.
  • Alternatives for returning checks in monthly statements, providing options for secure storage of images or substitute checks.
  • Options for new services designed for businesses, like remote deposit capture.