Check 21 Legislation:

The Check Clearing for the 21st Century Act passed in October of 2003. The impact to you, the consumer, will be felt beginning on October 28, 2004, when the way in which banks process checks will change -- the biggest change to check processing in 50 years. 

Mercer County State Bank is poised to assist our clients through this transition by answering your questions and concerns, providing alternative products and services to check writing and processing, and keeping you up to date on the latest news about Check 21.

Get answers to the most commonly asked questions about Check 21 (see below).

                     Learn how Check 21 could effect you

                     Understand the events that lead up to Check 21

                     Discover how check imaging will impact check processing

Also, see "Substitute Checks and Your Rights" (this document is intended to be printed).


FAQ - Check 21 Legislation
On October 28, 2004, a new law known as Check 21 will go into effect to improve the overall efficiency of the nation's check payment system by eliminating the need to physically transport paper checks between banks. Mercer County State Bank would like to help familiarize you with how Check 21 will improve the way banks process checks.

What is Check 21?
Simply stated, Check 21 legislation allows banks to replace original paper checks with substitute checks that are made from digital images of the originals.
 
Why was Check 21 created?
Check 21 was created to reduce the time, risks and costs associated with paper check processing and transportation. Traditionally, banks rely on physical transportation -- such as planes and trucks -- to deliver checks between banks for payment.

Check 21 allows original paper checks to be removed from the collection process and be replaced with substitute checks/Image Replacement Document (IRD) created from digital image files. Banks can send check images electronically, reducing dependence on transportation that can be impacted by uncontrollable delays, such as weather or natural disasters.

What does Check 21 do?
Check 21 streamlines and improves check processing without requiring customers to change the way they write checks. It simply requires banks and customers to accept paper reproductions of original checks. These reproductions are called substitute checks or IRD.
 
What is a substitute check/IRD?
A substitute check/IRD is created by a bank and is a paper reproduction of a digital image of an original check. The substitute check/IRD contains an image of the front and back of the original check and conforms to banking industry standards for quality. It is called an Image Replacement Document (IRD).
 
What does a substitute check/IRD look like?
Here is an example of a substitute check/IRD. 

Remember a substitute Check/IRD is a paper reproduction of an original paper check. A MICR line containing all the information on the MICR line of the original check makes it suitable for automated processing in the same way as the original. It includes the legend: This is a legal copy of your check. You can use it the same way you would use the original check.

Do I have to accept substitute checks/IRDs as proof of payment?
Yes. Once a paper check is converted into a substitute check/IRD, it becomes the legal equivalent of the original paper check. Any bank or person must accept them as if they were the original checks.

Which checks are eligible to become substitute checks/IRDs?
All checks are eligible for conversion to a substitute check/IRD including, but not limited to, consumer checks, money orders and travelers checks.
 
What happens to my original check?
Since there are no requirements governing the retention of original checks, they may be destroyed once digital images of the original checks have been made. A substitute check/IRD made from the digital image becomes the legal substitute for proof of payment.

Am I allowed to 'opt out' of Check 21?
No. Once Check 21 legislation goes into effect in October 2004, it will apply to all financial institutions and their customers. There will be no "opt out" exceptions.

When will I encounter substitute checks/IRDs under Check 21?
After October 28, 2004, you can expect the following:

  • If you receive cancelled checks with your Mercer County State Bank statement, you may receive a combination of your original cancelled checks and some substitute checks/IRDs.
  • If you have check safekeeping and your cancelled checks are stored at Mercer County State Bank, images of substitute checks/IRD may be stored in place of the original checks.
  • If you have online access to your account transactions, images of your checks and substitute checks/IRDs will be available for viewing.

What other impact will Check 21 have on me?
With Check 21, checks will be processed more quickly, which may result in funds being withdrawn from your account sooner than in today’s environment.

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