Check Clearing For The 21st Century Act - Check 21

AAA

DEFINITION of 'Check Clearing For The 21st Century Act - Check 21'

A federal law that took effect on October 28, 2004, and gives banks and other organizations the ability to create electronic image copies of consumers' checks. The images are then sent to the relevant financial institutions to be processed, where money from a consumer's account is transferred to the receiving party's account.

INVESTOPEDIA EXPLAINS 'Check Clearing For The 21st Century Act - Check 21'

This law aims to make use of technology to reduce or eliminate the costs involved with paper check processing. For example, the cost of physically transporting a paper check from one part of the country to another is far higher than the delivery of an image of a check across a secure network.

After a predetermined holding period has elapsed, banks may destroy the original paper check. However, not all banks do this and in some cases, consumers may be able to ask for their cashed checks back for record-keeping purposes.

RELATED TERMS
  1. Negative Float

    The period of time between when a bank customer writes a check ...
  2. Checkbook

    A folder or small book containing preprinted paper instruments ...
  3. Wire Fate Item

    An archaic term that refers to a request made by a bank when ...
  4. Remote Disbursement

    A cash-management technique that some businesses use to increase ...
  5. Electronic Bill Payment & Presentment ...

    A process used by companies to collect payments via the internet, ...
  6. Certified Check

    A type of check where the issuing bank guarantees the recipient ...
RELATED FAQS
  1. How does investment banking differ from commercial banking?

    Investment banking and commercial banking are two primary segments of the banking industry. Investment banks facilitate the ... Read Full Answer >>
  2. Why do commercial banks borrow from the Federal Reserve?

    Commercial banks borrow from the Federal Reserve primarily to meet reserve requirements when their cash on hand is low before ... Read Full Answer >>
  3. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  4. What role does a correspondent bank play in an international transaction?

    A correspondent bank is most typically used in international buy, sell or money transfer transactions to facilitate foreign ... Read Full Answer >>
  5. What is the difference between a correspondent bank and intermediary bank?

    Correspondent and intermediary banks serve as third-party banks that coordinate with beneficiary banks to facilitate international ... Read Full Answer >>
  6. What net interest margin is typical for a bank?

    In the United States, the average net interest margin for banks was 3.03% in the first quarter of 2015. However, this was ... Read Full Answer >>
Related Articles
  1. Options & Futures

    The Ins And Outs Of Bank Fees

    These service charges could nickel and dime you right out of your nest egg.
  2. Insurance

    Your First Checking Account

    This owner's manual will show you what to expect from your bank.
  3. Investing

    Can You Be Sued for Negative Comments Online?

    It's important to understand the basics of libel law so you can avoid posting statements that might result in a lawsuit.
  4. Investing Basics

    Is Your Broker Churning Your Account?

    Is your broker churning your account to generate fees? Here's how to know and what recourse you have.
  5. Investing

    Why We Need Antitrust Laws

    A look at antitrust laws in the United States and the many anticompetitive practices they safeguard against.
  6. Savings

    Best Banks to Stash Your Million Dollars

    Get the richest perks and red carpet treatment for you and your money from these financial institutions.
  7. Trading Strategies

    IPO Flippers And The Companies Who Hate Them

    Learn how flipping activity affects an initial public offering.
  8. Taxes

    Gay Weddings Mean Big Business

    The coming boom in same sex marriages represents a money-making opportunity for anyone in the wedding industry.
  9. Fundamental Analysis

    How Patent Trolls Hurt Competition

    Patent trolls are known to have a negative impact on the overall business ecosystem. Investopedia explores how.
  10. Economics

    4 Challenges Uber Will Face In The Next Years

    Uber is growing but also facing tough challenges both in America and abroad.

You May Also Like

Hot Definitions
  1. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  2. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  3. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  4. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  5. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  6. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!