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Check Clearing for the 21st Century Act, Pub. L. No. 108-100 (Oct. 28, 2003) (became effective on Oct. 28, 2004).


Check 21 is designed to foster innovation in the payments system and to enhance its efficiency by reducing some of the legal impediments to check truncation. The law facilitates check truncation by creating a new negotiable instrument called a substitute check, which permits banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving paper checks.

Instead of physically moving paper checks from one bank to another, Check 21 allows banks to process more checks electronically. Banks can capture a picture of the front and back of the check along with the associated payment information and transmit this information electronically. If a receiving bank or its customer requires a paper check, the bank can use the electronic picture and payment information to create a paper “substitute check.” A substitute check is the legal equivalent of the original check and includes all the information contained on the original check.

This process enables banks to reduce the cost of physically handling and transporting original paper checks, which can be very expensive.