Check 21 - what is it?
Many have heard of "check 21" and the promise that "more bad checks will bounce." Maybe you have heard that the "float" for bad checks is gone. In the statements from your bank, you likely no longer receive back the original copies of the checks you wrote.
Back in October of 2004 a Federal law was passed. This law allowed "copies" to be used in replace of original checks. These "substitute copies" are generally electronic items (images). By moving away from handling paper checks the process to clear checks became faster and cheaper.
Check 21 is a pretty basic operation. Checks are received, scanned, and the image is then sent to the appropriate bank. The manual sorting and processing of the past is going away. Too, checks do not need to be physically transported from place to place. Just as the Internet can bring things to us in seconds, so the electronic processing of checks moves things along very quickly. Since checks clear much faster, people have less time to put money into their accounts. The days of "floating checks" (writing a check and waiting a few days before depositing funds to cover it) are just about gone. If customers write checks without money in the account, there is a significant chance that it will bounce.
Thankfully NSF check collection services are able to work with copies. Check 21 will not change their ability to recover NSF checks for small businesses and large corporations. One service that knows all about check 21 and bounced checks is NorthStar--it offers FREE NSF check collection and you may access it at www.bumchecks.com.
For news about check 21, please check out this link on my collection agency blog: http://bumchecks.blogspot.com/2007/03/check-21.html