The New Federal "Check 21" Act and How It Affects Your Account
A new federal law called Check 21, or The Check Clearing for the 21st Century Act, has begun as of October 28, 2004, to change the way your checks will be processed for payment, and will make a copy of a canceled check the legal equivalent of the original.
At Indiana Business Bank, we're committed to making this change easy for you, and keeping you informed as we prepare for the next stage of banking technology.
What is Check 21?
Check 21 is a law that went into effect on October 28, 2004. It allows any bank or financial institution that processes your check to replace your check with a "substitute check" - a copy made from a digital image of the original.
Banks will no longer need to rely on paper checks for the check clearing process. Rather than physically transporting original paper checks to each other, banks may exchange substitute checks created from electronic images instead.
Why was Check 21 created?
Check 21 is designed to increase the efficiency and security of check processing. By allowing check images to travel across the country electronically, it will result in:
- Enhanced security and faster detection of fraud
- Less paper to process and store
- Reduced vulnerability to disruption due to weather or other events
- Faster clearing of payments by check
Indiana Business Bank does not return my checks to me with my monthly statement. Will that change?
No. At some point in the check clearing process, Indiana Business Bank or another financial institution may convert one of your original checks into a substitute check. We do not return checks or substitute checks with statements but instead provide an imaged copy of all checks that have cleared your account. All check images may also be accessed through our Online Banking. You can request copies of your checks at any time.
What happens to my original check?
Your original check may be destroyed once a digital image of the check has been made.
But since Check 21 specifies that a substitute check will be the legal equivalent of the original check, you can use the substitute check for proof of payment or for any other reason that might require an original canceled check.
How else does Check 21 affect me?
With Check 21 you may benefit from enhanced security and fraud detection. You may also notice that your checks will clear your account more quickly.
Can I "opt out" of Check 21?
No. Once Check 21 went into effect on October 28, it applied to all financial institutions and customers.
If you have additional questions please contact us.