Check 21 is a law that enables checks to be transmitted electronically to other financial institutions and clearing agents, eliminating the need to ship paper checks. Check 21 established a new form of negotiable instrument called a "substitute check" created from an electronic image that is the legal equivalent of the original paper check for all purposes as long as the document conforms to the requirements of the statute. While Check 21 does not require depository institutions to process electronic images, all depository institutions must accept substitute checks, and comply with consumer protection provisions and disclosure requirements.

Does an institution have to accept substitute checks presented to it for collection or returned to it as unpaid?
Yes. Substitute checks are the legal equivalent of the original paper check for all purposes and all institutions must accept them as if they were original checks.

Can institutions or their customers "opt out" of Check 21?
No. Under the Act, no institution or any of its customers may "opt out" of the Act; they all must accept a substitute check in lieu of the original paper check.

Will customers still be able to receive their cancelled checks?
Customers who receive their paper checks with their bank statement will continue to receive cancelled checks with their bank statement, but some of these may be substitute checks.

Are any checks excluded from conversion to a substitute check?
No. All checks are eligible for conversion to a substitute check. This includes but is not limited to consumer checks, commercial checks, money orders, travelers checks, treasury checks, etc.

Customer Questions

Is it true that I will no longer be receiving my original checks with my statements and that some of my checks may be copies of the original?
If you currently receive your checks today, you will continue to receive them but some may be substitute checks.

What if I need a cancelled check to prove that I paid for something or made a payment?
The substitute check must be treated the same as the original check under both state and federal law. It will represent legal proof of payment and include the phrase, "This is a legal copy of your check."

If my checks clear more quickly, will I get my money sooner?
No. The legislation does not affect the hold times placed on deposited items. However, as a result of Check 21, funds may make their way through the system more quickly and reduce the time that you'll wait for checks to clear. The holds placed on your account are placed to protect your funds in the event that fraudulent checks are deposited into your account.

Will my deposits clear sooner?
Deposits should be made before checks are written. With checks clearing more quickly, you'll need to make sure that you have sufficient funds in your account to cover any checks you write to avoid overdraft charges.

Where are my original paper checks?
Check 21 allows checks to be "truncated", which means that the original paper check may be removed from the collection or return process and replaced with an electronic copy.

What happens to my original paper checks?
After converting your check to an electronic image/substitute check, the institution that converted it may destroy the original paper check. The electronic image/substitute check is then processed through the payment system as your paper check would have been.

Does the substitute check look like my original check?
A substitute check is the size of a business check and contains the front and back of the original paper check, along with other information as it appeared when it was truncated.

What happens if there is an error as a result of converting an original paper check to a substitute check?
There is a process by which you will be able get a recredit for disputed funds within 10 days. This will give the institution time to resolve the matter, and allow you access to your funds during that time, up to $2,500 for each disputed check. The consumer recredit rights will be explained in a notice provided to all customers.