Electracash’s “Check21 Service” captures transaction and user data plus the user’s actual signature to create an image of an actual check. The resulting check image qualifies as a fully legal replica of a physical paper check for Check 21 processing, which enables debiting of checking accounts directly through the U.S. banking system. The advantages of Electracash’s Check21 Service for internet purchases are that Check 21 transactions:
- Are legal checks for all banking and payment purposes.
- Carry the customer’s actual signature, and are therefore more difficult to challenge dishonestly – reduction in consumer friendly fraud.
- Are governed by EFT rules, rather than ACH rules.
- Enable faster returns processing.
To experience a demonstration of Electracash’s Check21 Service, click here.
About Check 21
“Check 21” is a United States federal law enacted to create and transmit fully digital images of paper checks for electronic processing through the banking system. Enacted in October, 2004 as a result of September 11, 2001 (when the transportation of physical paper checks was disrupted), a Check 21 image is the legal equivalence of a physical paper check for all purposes within the United States.
A Check 21 image is an electronic picture of the front and back of a physical paper check. Data captured includes:
- From the “front” of the check: transaction date, payee name, dollar amount of the check (in numbers and spelled out), payer’s bank routing and transit numbers, payer’s checking account number, and the payer’s signature.
- From the “back” of the check: payee’s endorsement and depository instructions (bank and account information).
The check-based data are captured in the Check 21 format and transmitted through the U.S. banking system; there is no central clearing house. The Check 21 system is completely separate from the ACH system in the United States, and Check 21 transactions are governed by U.S. check laws and regulations, not by electronic funds transfer laws.
Consumer Rights
In the U.S. today, many banks provide their customers with imaged versions of checks in monthly banking statements. If a receiving bank or its customer ever requires a physical paper check, the bank can use the electronic picture and payment information to create a paper “substitute check.” Consumers may use a canceled substitute check as proof of payment just as they would use a canceled original paper check, and consumers who believe a substitute check was not properly payable are entitled to special expedited re-credit protections.
To learn more about consumer rights for Check 21 transactions, please see the Consumer Protection section of the Federal Reserve’s web site at: http://www.federalreserve.gov/paymentsystems/truncation/faqs.htm.
To learn more about Check 21, please visit http://www.federalreserve.gov/paymentsystems/truncation/
