| According to the American Bankers Association, Americans write about 48 billion checks per year.
That means that banks process and transport over 200 million paper checks, on average each business day. This system probably would have remained
unchanged, if not for the events of September 11, 2001. That day, and its aftermath, clearly exposed the vulnerability of the U.S. financial system's
dependence on paper checks. When the FAA shut down our nation's air transportation system, millions of paper checks were left waiting to be
transported from one bank to another via ground transportation, and therefore could not be processed as quickly as would normally be the case. It was
clear that a change had to be made. The idea of image exchange, proposed early in the 1990s, began to gain momentum, and that momentum culminated in
the passage of “Check 21”.
The new federal law, Check Clearing for the 21st Century Act, commonly referred to as “Check 21”, will go into effect on October 28,
2004. This law allows for a printed check image to carry the same legal standing as an original paper check. It encourages banks to exchange images
instead of paper, reducing or eliminating storing, transportation, and delayed posting costs, and will be the most expansive technology overhaul the
banking industry has experienced in the past 30 years.
How will it work? After a check's image is captured at the financial institution at which it was negotiated, the image will be transmitted
quickly to another bank over a secure, managed network, shortening the traditional clearing and settlement process, giving immediate credit to the
customer. Simply stated, Check 21 will do for checks what e-mail did for letter writing. As a customer, this new system will affect you; and we will
work to keep you informed as to how these changes will affect the way you do your banking, and help you to adjust to those changes. |
