Effective October 28, 2004, the Check Clearing for the 21st
Century Act (Check 21) was passed into law. The goal of this act was "to
improve the overall efficiency of the nation's payment system." Since the
check-processing environment involves extensive transportation costs and is
time consuming, this law allows for the creation of a new negotiable instrument
called a "substitute check" to help expedite the check collection process.
How it works
Financial institutions remove the original check anywhere in the check clearing
process and replace it with an electronic reproduction1
of your original check.
Substitute checks will include an exact copy of the original check and will
contain other pertinent information.
Benefits
Allows faster collection and return of checks
Provide greater control over accounts and personal finances
Checks clear faster
Few noticed changes with Credit Union checking accounts.
