About Check 21

Beginning October 28, 2004, the way banks process checks changed as the Check Clearing for the 21st Century Act (Check 21) became effective. Check 21 includes a set of new industry standards that allow banks to process checks more efficiently by means of electronic check conversion. You have probably experienced two other forms of electronic payment practices, or "check conversions”.

The more common example of check conversion is when a retailer converts your paper check into an electronic ACH (Automatic Clearing House) payment right at the register. In this example, when you write a check for your purchase, the retailer will hand the check back to you immediately after it’s converted into an electronic ACH payment. In most cases, you are then asked to sign a register tape, which serves as your authorization to deduct the purchase amount from your account. Another form of check conversion is when a company (such as a utility company or credit card company) converts the check you send with your payment coupon into an ACH payment. In this scenario, your check has been converted to an electronic format and the original check will not be sent back to you. However, the payment will be reflected in your bank statement. It is important to understand that both of these situations are just examples of other types of electronic check conversion and should not be confused with substitute checks, which are introduced with Check 21.

One of the goals of Check 21 is to improve the overall efficiency of the nation’s payments system. Even with the aforementioned check conversion methods, most checks in today’s banking environment are physically transported (across town or across the country) before they can be cleared through the banking system. This transportation of checks is expensive and time-consuming. Check 21 provides a new option: legal acceptance of paper reproductions of original checks. This reproduction is called a "substitute check" and is produced from a digital image of the original check.

By October 28, 2004, every bank was required to accept the substitute checks, just as they currently accept your original paper checks. When you receive your account statement after October 28th, you may begin seeing substitute checks. A substitute check represents the legal equivalent of the original check and will include all the information contained on the original, and must include the text “This is a legal copy of your check.” To protect customers, all substitute checks must be produced in accordance with industry standards for quality.

All of these changes allow for faster payment processing and even better service to you, our customer. While this page has been created to provide an overview of Check 21 and how it has affected the way in which checks are processed, you may have other questions. Click here to read about the most commonly asked questions regarding Check 21. Or you can contact us at (314) 631-5500 for more information.