Check Clearing for the 21st Century Act
Check 21
Check Clearing for the 21st Century Act (Check 21) went into effect on October 28, 2004. This law allows for the incorporation of electronic technology to improve the check processing system. The old method of processing checks is both costly and time consuming because checks have to be physically transported to several locations during the check clearing process. Check 21 allows check processors to produce a copy of the original check and process it as if it were the original check. This “substitute check” will have the verbiage “This is a legal copy of your check. You can use it the same way you would use the original check.”
To produce a substitute check, an electronic image of the original check must be created. This process of converting the check to an electronic image will reduce the time required to process checks. Therefore the amount of time between the writing and the cashing of a check (commonly referred to as float) will be reduced.
Because MAX Federal Credit Union does not return cancelled checks, you will not see a change in your account statement. All checks will continue to be listed in the same format. If you request a copy of your cancelled check you may receive a copy of the substitute check.
Check 21 should help reduce your potential risk for identity theft because the number of people required to process your check will be greatly reduced.
There is a difference between an electronic check and a substitute check. An electronic check is an electronic funds transfer that is initiated by a check. The e-check is routed through the Automated Clearing House (ACH) network. The transaction will appear on your account statement as an electronic transaction. A substitute check is a replacement that is the legal equivalent of the original check. It is a copy of your original check, processed as a check and will appear on your statement as a check.
Read our Funds Availability and other policies...
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