The Check 21 Act is landmark legislation that goes into effect on October 28, 2004. It will permit any person or entity who processes a check to create what the Act calls a “Substitute Check” — a paper reproduction of the front and back of the original check. The substitute check will also bear the legend, “This is a legal copy of your check. You can use it the same way you would use the original check.” This substitute check will be an electronic image of the original check.
Typically, when a check is written for any transaction — paying a bill, making a purchase — it is that actual check that must be processed. It must be physically transported from one location to the next, and that can mean days to complete the payment cycle. This can also mean an increased risk of the check being lost or stolen.
How will this effect you? Here are the major points to consider:
- Substitute checks are electronic images of the original check and are considered as valid as the original check
- Electronic images of checks can be processed much more quickly and efficiently than paper checks — processing time can be cut from days to possibly hours
- Check images should help reduce the risk of any identity or account theft — the physical check is removed from the processing stream; electronic processing reduces human contact to sensitive information
|
If you balance your checkbook regularly or record your transactions as you make them, you will hardly notice any difference. However, members who rely on a delay between the time a transaction is conducted and the time it clears their account could run the risk of a potential overdraft. A good rule of thumb to follow: If you don’t have the funds in your account at the time you are writing the check to cover the check, you shouldn’t write it!
With the creation of a substitute check, payments can be processed electronically — decreasing processing time and reducing the likelihood of items being lost or destroyed in transit. And with faster processing comes decreased “float” times, or the time between the writing and the cashing of the check.
Members of First South already have some experience with this; checks are imaged and provided via online banking or through our financial centers.
Our overdraft protection and overdraft privilege can certainly help cover you during the implementation of the Check 21 Act. If you have questions or concerns, please visit any of our financial centers or call us at 901.380.7400. |
While others make checking accounts* complicated with restrictions and fine print, we don't. Just maintain a balance of at least $200* in your First South checking account and you pay no monthly service charge. If your balance drops below $200*, your service fee is only $8*. And, if your average daily balance is $1000* or more, you earn interest. That's all there is to it. No large deposits to maintain. No complications. No fine print. What could be easier than that?
