Check 21 is a new law effective
October 28, 2005.
This law will allow credit unions, banks and processors
to “truncate” checks earlier in the check
clearing process and more often. Truncate means to remove
an original paper check from the check process and in
its place make a substitute electronic check. It also
allows all U.S. financial institutions to start the
process of substituting paper checks with electronic
checks at any point during the check collection process.
While Check 21 will significantly speed up the handling and collection of checks, the potential for check fraud losses is nearly certain as the conversion process destroys the evidence of fraud in most cases.
What does Check 21 mean for you & us?
Ongoing updating of effective security features.
Utilize Check 21, checks must meet ANSI standards.
The key for check providers is
the continued use of check fraud prevention.
Industry experts are recommending from a defensive position,
companies and individuals should be encouraged to use
high security checks with eight or more security features.
Sterling Business Services offers a minimum of 10 free security features on our laser and continuous format business checks.
Check 21 does not provide guidelines or requirements for the printing or creation of the original check. However, documents must be “image friendly” in order for the banks to comply with Check 21. Requirements for image compliant documents are outlined in ANSI X9.7, X 9.90.
All of Sterling's business checks have been code compliant since 2001. Sterling, being proactive, realized the need to be image compliant and reviewed the latest ANSI specifications 3 years ago. We utilize the RDM Image Qualifier IQ-X97 to check for strict image compliance.
What are the areas of the check that are of concern?
The areas are the CAR, MICR line, signature line, etc. It is required that these areas have defined print contrast levels that allow scanning of the handwritten or printed data. Also it is required that background print not interfere with handwritten or printed data in areas of interest.
