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 Articles
  1. The Ins And Outs Of Bank Fees
    Options & Futures

    The Ins And Outs Of Bank Fees

  2. Your First Checking Account
    Insurance

    Your First Checking Account

  3. How Bank of America Holds 1/8 of All ...
    Stock Analysis

    How Bank of America Holds 1/8 of All ...

  4. JPMorgan Chase: Too Big (And Profitable) ...
    Stock Analysis

    JPMorgan Chase: Too Big (And Profitable) ...

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center