Check 21: a step on the path to electronic banking: the Fed envisions a U.S. payments system that is more reliable, faster, and less expensive as check processing becomes primarily electronic, displacing today's methods of processing paper checks. "Check 21" is helping to pave the way.

Partners in Community and Economic Development, June, 2005 by Fraher, Richard

Check 21 takes effect

The Check Clearing for the 21st Century Act, known as Check 21, became effective October 28, 2004, concluding a year of intense preparation by everyone in the check business. Check 21 permits banks to create and exchange a new kind of paper document, the substitute check.

Through the new law, a properly created substitute check becomes the legal equivalent of an original check. In simple terms, a substitute check is a digital image of an original check reprinted using a specific format that can be processed the same way as the original on the backroom systems of banks.

The purpose of Check 21

Check 21 makes it possible for banks to collect checks by exchanging electronic images of checks instead of the...

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