To improve the overall efficiency and security of the nation's financial system, a new federal law known as Check 21 — The Check Clearing for the 21st Century Act — went into effect on October 28th, 2004. Check 21 FAQ.
Onebanc has prepared the following questions and answers to inform our customers about this law. If you have any further questions please contact one of our banking professionals or visit your local Onebanc banking center.
What is Check 21 and what is its basic purpose?
Check 21 is a federal law that is designed to enable banks to handle checks more electronically. Check 21 became law on October 28, 2004. If you received your cancelled checks or, more likely, the electronic images of your cancelled checks with your Onebanc account statement, you may have begun seeing substitute checks after that date.
Does check 21 change the way I write checks?
No. You will continue to write your current paper checks and accept them from others.
What happens to my original checks?
Once a digital image is made the original is destroyed. The electronic image may be used to create a paper “substitute check.”
Is electronic processing secure?
Electronic processing is not new to the financial services industry or to Onebanc. It is a safe, reliable and efficient way to process your check information securely.
I now receive check images with my statement or when I view my transaction history detail online. What effect will Check 21 have on these images and statements?
You will continue to receive images of processed checks just as you do today. However, you will begin to notice a combination of original and substitute check images on your image statement.
If Check 21 accelerates the processing time of checks, how does it affect the amount of time between the writing and cashing of a check?
Check 21 has resulted in the reduction in the “float time,” the time between the cashing and clearing of a check. Customers who sometimes relay on this “float time” to maintain a sufficient balance will need to be careful to avoid being overdrawn. One way for you to better control the risk of overdraft is to view your daily activity through our easy-to-use online banking service.
How are image statements different from substitute checks?
Instead of receiving cancelled checks, most Onebanc customers receive monthly image statements that show multiple pictures of canceled checks per page. After October 28, 2004, the picture on the image statement could represent an original check or substitute check. Whether you receive an original check, a substitute check or an image statement, check law protects all consumers against erroneous and unauthorized check payments.
What is a substitute check? What does it look like?
A substitute check is a paper copy of the front and back of the original check. It is slightly larger than your original check so that it can contain a picture of your original check. The substitute check will accurately represent the information from the front and back of the original. The substitute check will have the statement: This is a legal copy of your check. You can use it the same way you would use the original.
Can I use a substitute check as proof of payment?
Yes. You can use a substitute check as proof of payment because it is legally the same as the original check. For example, the IRS will accept your substitute check as proof of payment.
Note to Business Owners:
Your customers may also present a substitute check as proof of payment. Additionally, unpaid or NSF checks could be returned as substitute checks.
Is it possible for me to opt out of Check 21?
No, once the legislation went effect on October 28, 2004, it applied to all bank customers at every bank nationwide with no exceptions.