Understanding Check 21

What is Check 21?
The Check Clearing for the 21st Century Act, better known as "Check 21,” makes check processing and payments more efficient. Check 21 enables banks to take a picture image of your check and process it electronically rather than transporting checks via truck, train or airplane, thereby saving processing time.

How Check 21 may affect you

This law may affect you in several ways, including:

  • Time between writing the check and its being paid from your account, will be reduced
  • Faster access to your funds since your deposited checks may become available more quickly
  • Banks will not be able to return all of your original checks because many of them will be cleared electronically
I paid by check and the merchant gave it right back to me
When you write a check to pay for goods or services, merchants now have the option to process your check electronically. If they choose to do this, the merchant will scan the check to obtain your banking information, void it and return it to you. Your payment will be deducted from your account.

Turn checks into ACH payment
Related to, however not included, in Check 21 is the notion that a growing number of companies (credit card companies, utilities, retail stores etc.) have the capabilities to convert your paper check payment to an electronic payment called an Automated Clearing House or ACH. This technology results in fewer checks returned to the bank and a check number may not be included on your statement. Instead, the item will appear in the electronic transactions portion of your statement and will include the company's name.

Please call you Baird Financial Advisor with any questions regarding Check 21.