|Check 21 FAQ
What is Check 21?
The official name of Check 21 is "Check Clearing for the 21st Century Act." The new Act was passed by Congress in the summer of 2003 and signed into law on October 28, 2003 by President Bush. This new law goes into effect on October 28, 2004 and was designed to make the check clearing process faster and more secure. Check 21 provides for the creation of a new negotiable instrument known as a "Substitute Check."
How does Check 21 make the check clearing process quicker?
Check 21 streamlines the check processing system by allowing financial institutions to take an electronic image, or picture, of your check, create a paper reproduction, and process the check electronically, rather than transport the check between banks by truck, train or airplane. This reproduction is called a substitute check and is the legal equivalent of the original check.
What are the benefits of the new Act?
Check 21 offers several benefits for both the consumer and the banking industry. In fact, it:
• Helps to catch fraudulent checks faster.
• Improves the efficiency of the U.S. payment system.
• Eliminates the hazards associated with transporting documents (i.e., paper checks damaged due to weather, transportations risks, theft, etc.)
• Checks clear faster, making your account balance more accurate.
• Reduces the expenses associated with storing billions of paper checks.
Is a substitute check a real check?
If a substitute check meets all the legal requirements of the original check, then the substitute check is indeed a real check and possesses the same legal equivalence of the original check. Any U.S. check can become a substitute check, including personal checks, government checks, business checks, traveler's checks, and money orders.
Does Check 21 change the way I write or accept checks?
Not at all, however, you may notice that checks you write may clear faster.
Where does my original check go?
At some point in the processing of the check, an electronic image is created from your original check, and the original check is then destroyed. Each financial institution will determine their retention policy for the original check.
What will the substitute check look like?
Substitute checks are similar in size to original checks with a slightly reduced image of the front and back of the original check. The front states: "This is a legal copy of your check. You can use it the same way you would use the original check."
To see samples, click here.*
What happens if I need a copy of my check for proof of payment?
First Northern will provide you with a copy of the substitute check, which will serve as proof of payment.
Will I still be able to view my cleared checks in First Northern Online Banking?
Yes, however, now you will see the substitute check image.
What do I do if I have a problem or error with a substitute check?
Please contact the credit union immediately if you believe an error has occurred due to a substitute check.
I notice that some checks I write at a store appear on my statement as an electronic payment. Is that different from Check 21?
Yes. That type of transaction is referred to as "check conversion" and is the process of converting a paper check into an electronic fund transfer for clearing through the Automated Clearing House (ACH) network. The check is posted on your statement only as an electronic item, and there is no image of your check. This occurs when:
• You send a payment in the form of a check to a company. The company then converts the check into an electronic transaction and clears it through the ACH network.
• You write a check at a store for an over-the-counter transaction. The cashier swipes the check to capture the account information and immediately returns the check to you. The transaction is then cleared electronically through the ACH network.
If you have any additional questions, please contact First Northern Credit Union by clicking here �
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