A Check 21 Guide Seeks to Aid Training, Cut Confusion

With banks and other players in the electronic transactions arena scrambling to get ready for the implementation in October of the Check Clearing for the 21st Century Act, some 16 financial-services companies and associations have published a guide to the law. They hope the new 20-page document will be used in training staff and in explaining the act to consumers. The new law, which is commonly called Check 21, is expected to significantly advance the conversion of paper checks into electronic transactions by conferring on machine-readable, image-based substitute checks the same legal status as the original checks from which images are made. Experts expect banks will increasingly join newly forming image-exchange networks to take advantage of the efficiencies created by the law. In these exchanges, banks swap images through networks for clearing and settlement rather than fly and cart paper checks around the country. At least five such image-exchange networks are under construction in anticipation of Check 21's Oct. 28 effective date, including one backed by the Federal Reserve. “Check 21 definitely helps made (image-exchange) easier,” says Steve Ledford, president of Global Concepts Inc., an Atlanta-based electronic-payments consultancy. The new training guide explains Check 21 and its implications and provides definitions of terms, such as substitute check, as well as provides examples of substitute checks, or “image-replacement documents” as they are also called. The organizations behind the guide hope it will give banks and others use “consistent definitions” in training staffs and help “reduce possible customer confusion.” Some of the organizations behind the new guide include the American Bankers Association, the Bank Administration Institute, Bank of America, the National Automated Clearing House Association (NACHA), and Wachovia.