Here are the answers to some questions you may have about Check 21:
Q: What is Check 21?
A: The Check Clearing for the 21st Century Act, better known as "Check 21", gives financial institutions the flexibility -- but does not require them -- to convert paper checks into electronic images and process them electronically rather than by physically transporting them from one institution to another. Electronic check Processing represents a significant potential for time and cost savings.
Q: What is a Substitute Check or Image Replacement Document (IRD)?
A: These terms are used to refer to the print outs of electronic images made from the original paper check. The Check 21 Act gives substitute checks or IRDs the same legal status as given to paper checks.
Q: How does Check 21 affect financial institutions, including M&S Bank?
A: Check 21 simply requires all financial institutions to accept, but not originate, substitute checks. Financial institutions are also required to notify account holders about the legal status of substitute checks.
- M&S Bank will accept both electronic check images (substitute checks) and paper checks. Substitute checks should not be confused with ACH transactions. They are originated and processed in different ways.
- M&S Bank will not originate electronic check images to send to other financial institutions at this time.
Q: When does Check 21 begin?
A: Check 21 becomes law on October 28, 2004. All financial institutions must begin accepting substitute checks and educate their account holders about Check 21 by this date.
Q: What will happen to my checks?
A: Checks that you write may be converted to electronic images by some financial institutions during the check clearing process. Not all financial institutions will be converting checks to electronic images at this time. These converted checks will be called "substitute checks."
Q: Will the substitute check be a copy of my original check?
A: Not exactly. A substitute check image will include a reduced version of the front and back of the paper check you write, but will also contain additional information identifying the processor and the legal acceptance of the item.
Q: What will happen to my original paper check?
A: The financial institution that converts your check to an electronic image will destroy your original paper check shortly after the conversion.
Q: Are substitute checks the same as an ACH debit to my account?
A: No. Substitute checks are originated and processed in a different manner. You will continue to receive an image of a substitute check on your statement.
Q: Some merchants pass my check through a machine to complete my purchase and return it to me. Is this a substitute check?
A: No. This converts certain information from your check into an ACH transaction that is automatically debited from your account. You will not receive a substitute check.
Q: I receive imaged copies of my checks on my imaged statement. How will I receive any substitute checks?
A: Substitute checks will also appear as images on the statement. They will appear as a reduced version of the paper check and contain other processing and legal information.
Q: I still receive my original paper checks with my statement. How will I receive checks that are converted to electronic images?
A: M&S Bank has already converted most accounts to imaged statements and no longer returns paper checks. All new accounts automatically get imaged statements. However, if you have an older account and still receive paper checks you will receive paper printouts of any substitute checks.
Q: How long will it take my check to clear if it is converted to a substitute check?
A: It will depend on which financial institution converts your check to an electronic image during the clearing process. Electronic images will be returned for payment much faster than paper checks. You should be sure that you have sufficient funds in your account when you write the check.
Q: How can I place a stop payment on a substitute check?
A: Stop payments must be in place before the electronic image is received for payment. This is the same procedure as for paper checks. However, because electronic images for substitute checks are processed faster, you should not delay any request to stop a payment.
Q: Are substitute checks recognized by a court of law in any legal action?
A: Yes. Substitute checks carry a "Legal Legend" imprint making them acceptable for legal evidence of payment.
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