Check 21

By Deane Barker on September 28, 2004

FRB: Check Clearing for the 21st Century Act Home: It seems the days of the paper check are rapidly coming to an end. A new law that goes into effect in late October allows banks to send electronic images of checks to other banks.

Physically transporting the check is no longer required, which will drastically reduce the ability to “float” checks which I mastered in college. Depositing banks can scan the check, destroy the physical copy, and the electronic version inherits all the legal characteristics of the phyical check

The law facilitates check truncation by creating a new negotiable instrument called a substitute check, which would permit banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving paper checks. A substitute check would be the legal equivalent of the original check and would include all the information contained on the original check.

So, the paper check has been eliminated from the depositing to issuing bank. How long until merchants can scan and destroy the check onsite and send an electronic copy to the depositing bank? Soon, money could come out of your account within a few minutes of writing a check at the grocery store.

Snopes has a good write-up about it. You may as well get a check card.

Gadgetopia

Comments

  1. Soon, money could come out of your account within a few minutes of writing a check at the grocery store.

    I’ve noticed stores such as the Dollar Store and the GAP are already doing this sort of thing. If I write a check at these places, they scan the account info off of the check and send it electronically at that time. On my bank statement, these transactions appear the same as a check card transaction does and the check number never comes through.. This is somewhat confusing when balancing the check book each month.

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