CHECK 21 FAQ
What is Check 21?
Check 21 is also called the Check Clearing for the 21st Century Act, which became the Check 21 law on October 28, 2004.
The Check Clearing for the 21st Century Act (Check 21) is a federal law that enables banks to process checks electronically in order to make check processing faster and more efficient.
Banks can capture a picture of the front and back of the check along with the payment information and transmit the check information electronically. If a receiving bank or its customer needs a copy of the paper check, the bank can then use the digital picture and payment information to create a paper “substitute check.”
Traditionally, banks often ship the original paper checks from the bank where the checks were deposited to the bank that pays them. Shipping and transporting these checks is very inefficient and costly.
How does Check 21 affect check writers and depositors?
Instead of getting the original checks mailed back to you when you get your bank account statement, you may now get what’s called a “substitute” check.
A substitute check is a reproduced copy of the original check and is a legal equivalent.
What Check 21, your bank is not required to return your original check to you. With Check 21, the law ensures that you have the same legal protections when you receive a substitute check from your bank, the same way when you receive an original check.
If you see an issue with a substitute check, you should notify your bank immediately. The Check 21 law provides a process that allows you to claim a refund when you receive a substitute check from the bank and there is an error because of the substitute check.
You should contact your bank within 40 days from the date of your bank statement or whenever you received the substitute check.
What is MICR?
The acronym MICR stands for Magnetic Ink Character Recognition. This is a standard method of printing with magnetic ink and special typefaces, to create documents that can be read and processed by bank processing machines.
How long has the MICR process been used?
The process evolved, when using the system of MICR was created during the 1950s by Stanford Research Institute, in response to increased demand by the banking industry for a streamlined method of processing checks. The typeface, or font, that they developed (called E-13B) was chosen for its superior recognizable characters by processing machines and was accepted as the standard by the American Bankers Association (ABA) in 1958, then in 1963, the American National Standards Institute (ANSI) accepted the ABA specifications as the American standard for MICR printing.
Do all banks require the use of MICR toner ink when depositing a check?
Today, compliance with ANSI standards is voluntary for each bank; however, the U.S. banking industry considers these standards the definitive basis for judging the quality of a MICR document. Even though most banks require the use of MICR toner ink when creating a check for deposit, not all banks do. However, if a bank does require that you print using the MICR ink and you do not, they might charge a service fee or delay the processing of your check. Therefore, to avoid these delays and fees we recommend that all of our clients print checks using the MICR toner ink. Remember, even if you deposit the checks into a bank that doesn’t require MICR the check may be transported to another bank or processing center which does require MICR.
Can I switch my standard non-MICR toner cartridge with the MICR toner cartridge each time I create a CHAX® check, or use a dedicated printer?
No. In fact, we discourage our clients from switching the cartridges in and out, due to the fact that this increases the risk of damaging the cartridges. Most toner cartridges are sensitive to light and thus may deteriorate when removed from the printer. They are not built for constant handling and are prone to break when inserted and removed repeatedly. On some printers, the image drum is not integral to the cartridge. On those, you would have to vacuum the printer so as to not leave non-magnetic toner in the machine which could be deposited on the first few checks. Our MICR toner cartridges yield the same number of pages as a non-MICR cartridge. You can print all your black & white documents using the MICR toner cartridge. There is no difference in appearance between the ink printed onto a sheet of paper. In many cases, our MICR toner costs the same or less than OEM cartridges.