Check Clearing in the Twenty-First Century Act
Atlanta, GA (PRWEB) September 13, 2004 –
The Banker’s Exchange, one of the nation’s leaders in providing new and used bank equipment, today announced the launch of a public service campaign aimed at helping customers understand Check 21 Legislation. Banker’s Exchange unveiled the first in a series of public service announcements to be posted online explaining what must be done now and what can wait regarding the Check 21 Act.
Kim Miller, Vice President/General Manager of the Banker’s Exchange, said, “Many of our customers have asked us about the federal ‘Check 21’ legislation. In response, we have prepared a series of articles intended to explain what the Check 21 Act is and what impact it will have on your institution and your customers. The first one addresses the long-term planning vs. short-term action items.”
Check 21, or "Check Clearing in the Twenty-First Century Act", is an initiative by Congress to revise the rules governing the exchange of checks between financial institutions, which essentially enables a more electronic check collection system for the country. While it does not require banks to change the way they collect checks it does make check reproductions an option, and therefore indirectly does require any bank and its customers to accept such paper reproductions of original checks when requested by any institution choosing that option.
Check 21 legislation is intended to reduce the costs and delay of paper processing and transportation requirements of check clearing as it is today. The Federal Reserve Board first proposed the legislation to Congress at the end of 2001 after an extensive study of the current system, but the concept gained significant momentum after 9-11 when airport closures of several days held checks from moving from city to city for collection. These events underscored the need for a more reliable way to collect check payments by enabling a bank to capture and transmit check images electronically, instead of transporting paper for collection.
Miller said, “Imagine, for example, a bank on the East Coast presenting checks to payer banks on the West Coast. Sending an image file electronically instead of putting checks onto a plane – check truncation – could mean collecting many checks one day faster and having the funds one day earlier. It also means that fog or snow will not delay the collection of the checks. When an image file is received by a correspondent bank, the Fed, or a service bureau, that party can print and deliver Image Replacement Documents, or IRDs, speeding up the overall collection process.”
He added, “The Reserve Banks will be offering new services to support Check 21, but in the short run you are likely to see more in the way of new requirements imposed by the Fed. For example, as of October 28th, 2004, the Fed will require the use of check stripping equipment on any repaired items submitted to them in High Speed Cash Letters rather than the use of older document carriers. The new requirement to perform check repair using check strippers centers around the simple reality that, with the Fed now scanning all items, current check scanning equipment does not register adequately clear images of items held in document carriers.”
In the long-term, the Check 21 Act will give the country a more electronic check collection system, reduce risk, reduce cost, and accelerate funds availability for consumers and businesses. It should also contribute to further progress in electronic check presentment and check safekeeping, in which banks do not return paid checks to their customers as well as the growth of online bill payment in place of check writing.
Miller concluded, “While the arrival of IRDs in the check presentation process will be gradual, the here and now requirements of Check 21 minimally means you must ensure your check repair operation employs the use of check stripping equipment. If you need help converting your check repair processing to utilize check strippers or are looking for a low cost check repair solution for low volume sites, please contact a Banker’s consultant for a full consultation and proposal.”
About Banker’s Exchange
The Banker’s Exchange is one of the most recognized names in the business, with more than 12 years of experience providing new and used bank equipment. Based in Atlanta, GA, the Banker’s Exchange has one of the largest selections of bank equipment in the country and provides fast turnaround and just-in-time delivery of both new and used bank equipment. The full version of their public service announcement is located at http://www.bankersx.com/check-21-legislation.html
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