Check 21 and IRDs

Frequently Asked Questions

Q.	What is Check 21?
A.		“Check 21” is the shortened name of the Check Clearing for the 21^st Century Act, also known as the Check 21 Act. Check 21 took effect on October 28^th, 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
	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.

Q.	How will Check 21 affect my business?
A.	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.

Q.	How will Check 21 affect “float time”?
A.	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.

Q.	What does the term “Image Friendly” mean?
A.	“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.

Q.	Are Relyco stock laser checks Image Friendly?
A.	Yes, all of Relyco stock laser checks have been upgraded to comply with Check 21 Standards for optimal scannability.

Q.	How do I know if my custom checks are Image Friendly?
A.	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.

Q.	How much does it cost to have my checks tested by Relyco?
A.	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.

Q.	What are the risks of non-compliance with the new Check 21 Laws?
A.	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.

	ASK A QUESTION:
	If you have another question pertaining to the Check 21 Act, click here.

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