Check 21

Financial institutions, banking offices, credit unions—they all offer their customers a variety of unique financial services, but the single most mission-critical activity they share is the processing of check payments.

In the past, checks were processed using a centralized system. Once received at bank branches and ATMs, checks were physically transported to an operations center for back-end processing (encoding, proofing, balancing, and sorting) using large check transport equipment. Then they were physically returned to the customer with monthly statements or sent back to the banks if the checks didn’t clear. Centralized processing was prevalent during the decades of the mainframe because it achieved great economies of scale. But today this method has evolved due to a number of factors, including the advent of imaging technology and the enactment of Check Clearing for the 21st Century Act (also known as “Check 21”).

The Check 21 Act is intended primarily to facilitate check truncation and foster innovation in existing check payment systems, without necessarily mandating receipt of checks in electronic format. The Check 21 Act is also expected to encourage financial institutions to transition from the old method of transporting and centrally processing physical checks to a new method of decentralized, electronic processing of check images. The voluntary adoption of accepting check images offers many time- and cost-savings that, in turn, accelerate the check clearing cycles, increase investable funds, and help to reduce fraud.

Key Check Imaging Benefits

• Funds become available faster for banks, due to the new legal framework for electronic transmission of check data that is provided by the Check 21 Act.

• Streamlines electronic collection and processing of checks.
• Eliminates paper-handling and transportation costs, including traditional microfilm costs and processing, postage, space, proof equipment, maintenance, and courier costs.
• Reduces labor and other operational costs, such as proof keying, power encoding, managing bulk file, statement preparation, and item research.
• Allows banks to move toward 24/7 real-time operations through enabling continuous processing.
• Banks can now truncate checks with or without prior agreement to exchange electronic check data with other banks. For those banks or customers requiring physical checks, the banks can create and provide substitute checks, also called Image Replacement Document or IRD, instead.
• Eliminates operational burdens and time spent involving return processing.

Check 21 Compliance Solutions

• Canon CR-180 Check Scanner
• Canon CR-55 Check Scanner
• Captovation Check Capture Software