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What
is Check 21? |
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A. |
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“Check 21” is the shortened
name of the Check Clearing for the 21st
Century Act, also known as the Check 21 Act.
Check 21 took effect on October 28th,
2004, and requires that all banks be able to
accept an electronic image of a check rather
than the paper check itself. Banks who
wish to send these electronic check images
will scan the checks to create electronic
files, and will then destroy the original
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paper
check. The electronic
image may be re-printed onto a new type of
document called an
Image Replacement Document (IRD)
or
Substitute Check. As it replaces
the original check, the IRD will be a legal
negotiable document, subject to the same
conditions and regulations as an ordinary
check. |
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How will Check 21 affect
my business? |
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The key effect on businesses will be that
their checks will now be, in many cases,
made into an electronic image at some point
during the routing process. For this
reason, checks will need to be “scannable”
or “Image Friendly” so that the banks can
create clear electronic images to transmit. |
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How will Check 21 affect “float time”? |
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Because checks can be sent electronically
under Check 21 rather than physically
carried from one point to the next, it is
possible that float time (the time between
when a check is written and when the money
is actually transferred from the account on
which it is drawn) will be reduced. This is
something that businesses will have to take
into consideration when writing checks, but
it should not have a dramatic impact, as it
is already illegal to write a check that
will be drawn on an account that does not
contain sufficient funds to cover it. |
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What does the term “Image Friendly” mean? |
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A. |
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“Image Friendly” (also referred to as “Image
Compliant”) means that a check or other
document can be scanned easily so that the
pertinent information (check amount, payee
name, routing info, etc) can be clearly
read. If extraneous printing or other marks
(background printing, company logos, void
pantographs, etc) show up when the document
is scanned, the ability of the mechanical
reader to “see” the critical information is
impaired. For a check to be considered
“Image Friendly”, everything but the
pertinent information should “drop out” when
the document is scanned. |
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Q. |
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Are Relyco stock laser checks Image
Friendly? |
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A. |
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Yes, all of Relyco stock laser checks have
been
upgraded to comply with Check 21
Standards for optimal scannability. |
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How do I know if my
custom checks are Image
Friendly? |
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A. |
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Because checks are processed by machine, it
is impossible with the naked eye to
determine whether your checks are Image
Friendly or not. The only way to truly
determine Image Friendliness is to
have your check
inspected and analyzed
by a qualified individual using
state-of-the-art equipment like that used at
Relyco. This equipment will measure things
like reflectance levels, paxel counts, print
contrast and file size to determine whether
a document is compliant. |
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How much does it cost to have my checks
tested by Relyco? |
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A. |
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Having just the check stock itself tested is
FREE to Relyco customers. Because the
checks will be printed when they pass
through the banks equipment, we also
strongly recommend that you have a live,
printed check tested as well. Relyco will
perform this service for a nominal fee of
$25, using your $25 check to do the
testing. We will provide you with a
detailed report (click
here to see a sample report),
and explain to you whether your check passed
or failed and why. Should your check fail,
we will also make recommendations as to what
changes are needed in order to become
compliant. |
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What are the risks of non-compliance with
the new Check 21 Laws? |
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At this point, no universal penalties for
non-compliance have been established, which
essentially means check processing
institutions (banks, clearing houses, etc)
will be implementing their own measures to
insure compliance. These may include
rejecting non-compliant checks, charging
fees, etc. |
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ASK A QUESTION: |
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If you have another question pertaining to
the Check 21 Act,
click here.
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