The Check Clearing for the 21st Century Act, or Check 21 Act is a United States public Law 108-100, enacted into law October 28, 2004 by the 108th Congress.

This act allows authorized recipients of a paper check to convert it to a digital form. Images of both sides of the check are electronically scanned, sometimes at the cash register. Then the check image can be processed as if it were the actual check without the need for further handling of the paper check.

The process of removing the paper check from the processing flow of a check is called truncation. Once a check is truncated, businesses, and banks can work with either the digital image or a print reproduction of the digital image. Both the digital image of the original check or any print copies are called substitute checks

Consumers are most likely to see the effects of this act when they notice that certain checks are no longer being returned to them with their monthly statement even though other checks are still being returned. Another place consumers will see the effects of this act is in large retailers such as Wal-Mart who will scan the check at the checkout register and then return the paper check to the customer.

The effect of this act will virtually eliminate all paper checks from the backend processing stream since the first time a paper check comes into contact with a corporation, it will be digitized and handled electronically. It will also minimize any float time that used to exist because the actual paper check had to travel from the point of origin to the financial institution it was drawn on.

The act was designed in the wake of the September 11, 2001 attacks, when airline interruptions severely disrupted the flow of checks across the country.

External links

• Check Clearing for the 21st Century information from Federal Reserve