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Will Check 21 affect my business?
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Check 21 affects all customers of banks, savings & loans and credit unions.
This includes consumers, businesses, non profit organizations and governmental
agencies.
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How will Check 21 impact my business?
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- Checks will clear faster. Now, more than ever before, you’ll need to ensure
you have sufficient funds in your account before writing a check.
- If you currently receive images of your processed checks with your monthly
statement, you will begin to notice a combination of original check images
and substitute check images. However, if you currently do not receive images
of your processed checks, your account statement will not be affected – all
checks will continue to be listed on your statement in the same manner.
- When checks you deposit into your business checking account are returned unpaid
to North Shore Bank and charged back to your account, you may receive a
substitute check rather than the original check.
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How will Check 21 affect the availability of funds?
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At this time availability schedules will remain the same.
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Does Check 21 apply to all check types?
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The ability to create a substitute check applies to all US drawn checks. This includes
personal, business/commercial, cashier’s, travelers, US Treasury, state and local
government, money orders, drafts, etc.
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What is a substitute check?
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A substitute check is the legal equivalent of your original check and will include all
the information contained on your original check. On October 28, 2004, every financial
institution in the country will be required to accept these substitute checks.
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What does a substitute check look like?
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A substitute check is a paper copy of a digital image of your original check. The
substitute check will include all the information contained on the original check
and bear the legend: “This is a LEGAL COPY of your check. You can use it the same
way you would use the original check.”
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Please click the on the image for a larger view.
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What are the specific standards of a substitute check?
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A substitute check is considered a legal equivalent of the original if it:
- contains an image of the front and back of the original item.
- bears the legend: “This is a LEGAL COPY of your check. You can use it the same way
you would use the original check”.
- includes a MICR line created from the original item. The MICR line will begin with
a 4 or a 5 (data position 44). A 4 represents forward presentment and a 5 identifies a return item.
- is suitable for automated processing.
- includes information on the bank that truncated the item and the bank that converted
the item to a substitute check.
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Will I ever receive a substitute check in my monthly statement?
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If we provide images of your checks and deposit tickets with your monthly statement,
over time you will begin to see images of substitute checks, but you will not receive
the actual substitute check.
You may receive a substitute check from North Shore Bank if you deposit an item into
your account and the item is returned unpaid to North Shore Bank in the form of a
substitute check. Just like an original check, we will then:
- charge the item back to your account.
- mail you the substitute check with the chargeback notice.
The substitute check you receive will be the legal equivalent of the original. The same methods of collection that you have implemented for an original check may be used for a substitute check.
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Will my monthly service charges increase due to substitute checks?
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We are required to charge the same processing fee for substitute checks as originals.
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What does the bank of first deposit do with an item after it is imaged?
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The bank of first deposit will hold the item for a period of time and then destroy the
item. The length of time the item is held may vary between banks.
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Will fraud protection features on my checks survive imaging and the creation of a substitute check?
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The check industry is working on developing new types of security features that will
survive imaging. Although at this time the actual result is unknown, we encourage you
to continue using security features since they do provide protection when the item is
presented for payment to a teller or a merchant.
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What can I do to prepare my business for Check 21 and future check processing methods as they evolve?
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- Review your disbursement float and be prepared for potential reductions in float.
- Educate your staff so they are aware of the Check 21 Act and substitute checks.
- Review your statements and/or online images to ensure you are receiving high quality
images. If not, examine your current check stock and consider changing to an image friendly
check stock.
- Evaluate your need for check image return. Check 21 changes will be gradual. However,
to prepare for the next phase of a paperless processing system, we encourage you to review:
1. How you are using your returned images?
2. What other products, such as online statements (that may be available or in development
today), will replace return check image yet meet your needs?
Did you know that your statements and corresponding items are available for viewing
through our online banking product for up to 90 days? Please contact one of our
offices if you are
interested in trying our free online banking for your business.
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What if I have a question about Check 21, a substitute check I receive, or available image retrieval options?
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Please contact one of our offices, we will be more than happy to answer all of your questions.
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;)