Check 21—How Check Processing is Speeding Up in the 21st Century

The Check Clearing for the 21st Century Act, or Check 21, provides for a new payment document called a "substitute check." This is a paper reproduction of an electronic image of the front and back of the original check. It greatly speeds up the check clearing process.

How does it work?

A financial institution receives a check drawn on an account at another financial institution. It may take a picture of the front and back of the original check and electronically transmit the image for payment rather than physically transporting the paper check.

The original check may be retained or destroyed and the electronic image becomes the record of the check. If a financial institution later in the check clearing process doesn't accept electronic check images, a substitute check may be created. A substitute check is the legal equivalent of the original check. View example.

What should I expect?

Since a substitute check is processed the same way as a regular check, it appears on your account statement as a check. However, Check 21 makes check clearing faster. Therefore, it is more important than ever for the funds to be in your account when you write the check.

Further, if you receive a check that was returned unpaid, you may receive a substitute check instead of the original check. If you request a copy of a check, you may receive a copy of a substitute check.

Concerned about a substitute check you received from Navy Federal? Please complete and submit this form:

• Claim Form (PDF—412 KB, approximate download time with 28.8k modem is 2 minutes)

For more information, contact Navy Federal or visit the Federal Reserve Board's online resources:

• Check 21 Questions & Answers at www.federalreserve.gov/paymentsystems/truncation/faqs2.htm
• Federal Reserve Board Consumer Guide on Check 21 at www.federalreserve.gov/pubs/check21/consumer_guide.htm