Starting October 28, 2004, checks will be more efficiently processed because of a new law, Check Clearing for the 21st Century Act or Check 21.

Q: What is Check 21?

A: An act that:

• Increases the efficiency of check processing by using electronic images or an electronic transaction (check conversion) instead of the original paper check.
• Allows for faster check clearing.
• Decreases fraudulent activities because there is less handling of a check and faster processing to verify account activity.
• Reduces the amount of paper for recordkeeping.

Q: How will my account be affected by Check 21?

A: Banks will now take a picture (an electronic image) of a check. These electronic images known as substitute checks will be used as proof of payment. They accurately represent the information on the front and back of the original check. The substitute check will have a notation. This is a legal copy of your check. You can use it the same way you would use the original check. Banks are not required to create substitute checks, but over time, more and more banks will participate in this process.

Q: What is a check conversion?

A: In addition to substitute checks, payments can be processed through check conversion. For example, a retail store may convert a paper check into an electronic transaction (ACH or automated clearinghouse payment) at the check out register. The cashier returns the original check to the customer and the payment is processed electronically through the banks. Another example - companies that are paid on a regular basis (i.e. utilities, telephone, credit cards,) convert checks into an ACH payment. The transaction will be reflected on monthly bank statements.

Q: What happens if I feel there is an error with my check processing?

A: If you believe a substitute check was not properly paid, you may file an expedited recredit from the paying financial institution. The financial institution must investigate and resolve the claim within 10 business days or provide you with a re-credit up to $2,500 pending completion of the investigation. Final determination must be made within 45 days.

Q: Are my funds accessed more quickly?

A: Yes because the time to physically transport checks by truck, train or plane is eliminated. So make sure you have adequate funds in your account before you write out a check.

Q: What happens to my original checks?

A: The check is digitally reproduced (copied) and then destroyed. Your proof of payment appears on the bank statement.


Should you have any further questions, please contact your branch.