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Important
Information About Check 21 For Our Customers
The
Check Clearing for the 21st Century Act, commonly known as Check
21, is a new federal law that becomes effective on October 28,
2004. To better inform our customers of the impact of this law,
California Bank & Trust has prepared the following list of
common questions and answers:
What
does Check 21 do?
In
brief, Check 21 will allow banks to replace an original paper
check with a "substitute check" that is made from a
digital image of the original check. Banks and customers will
be required to accept substitute checks in place of original
checks. Substitute checks will have the legal equivalency of
originals.
Why
was Check 21 created?
Check
21 was created to reduce the time, risks and costs associated
with processing and transporting paper checks. Traditionally,
banks have been using planes, trucks, and other means to physically
transport checks to the drawer's bank for payment. This created
situations where check processing could be delayed by uncontrollable
events such as adverse weather conditions or natural disasters.
Check 21 improves the efficiency of the nation's payment system
by minimizing the physical transportation of checks between banks.
How
does Check 21 help?
Check
21 allows original paper checks to be replaced with substitute
checks created from digital image files. Thus, banks will no
longer have to physically send the original checks between each
other for collection, but rather can electronically transmit
digital images of checks. Removing original paper checks from
the collection process reduces the risk of delayed processing.
What
is a substitute check?
A
substitute check is a paper reproduction made from the digital
image of an original check. The substitute check contains an
image of the front and back of the original check along with
bank processing information. The substitute check must conform
to banking industry standards and will include all the information
contained on the original check. The substitute check is the
legal equivalent of the original check
What
does a substitute check look like?
The
size of the substitute check will be similar to the size of a
business check; it will contain the same information as the original
check and it will show the front and back of the check, including
endorsements. It will contain the following wording on the left
side of the document: "This is a legal copy of your check.
You can use it the same way you would use the original check." The
appearance of each substitute check may vary slightly depending
on the type of equipment used in processing.
When
will I encounter substitute checks under Check 21?
After
October 28, 2004, you can expect the following:
- If
you receive cancelled checks or check images with your CB&T
statement, you may receive a combination of your original
cancelled checks and some substitute checks.
- If
you have check safekeeping and your cancelled checks are
not returned, images of substitute checks may be stored in
place of the original checks. When you ask for a copy of your
check, you may receive a copy of a substitute check.
- If
a check you have deposited is returned unpaid, you will receive
either the original or a substitute check depending on how it
was processed and returned to California Bank & Trust.
How
will the Check 21 law affect me (or my business)?
Generally,
it will have no impact on the way a customer issues or uses checks.
However, if you receive cancelled checks or a check you deposited
to your account is returned unpaid, you may receive a substitute
check in lieu of the original.
Are
all checks eligible to become substitute checks?
All
checks are eligible for conversion to a substitute check, including,
but not limited to, consumer checks, money orders and travelers
checks. The only checks that cannot be converted to a substitute
check are foreign checks.
Will
my cancelled checks continue to be returned with statements?
Customers
with accounts who currently have their cancelled checks returned
with their statements will continue to receive cancelled checks--but
some or all of these items may be a substitute check.
What
happens to my original check?
Since
there are no requirements governing the retention of original
checks, they may be destroyed once digital images of the original
checks have been made. Any bank in the processing cycle may do
this, not necessarily CB&T.
Can
I 'opt out' of Check 21?
No.
Once Check 21 legislation goes into effect in October 2004, it
will require everyone (banks, customers, businesses, government
agencies, etc.) to accept a properly prepared substitute check
as if it were the original check. All checks except foreign checks
are eligible to become a substitute check. There will be no "opt
out" exceptions. This is a federal mandate, not a rule imposed
by California Bank & Trust.
What
other impact will Check 21 have on me?
As
more banks make the investments to capitalize on the opportunities
presented by Check 21, checks written by customers may clear
faster. Checks you deposit may also clear faster, and notification
of checks you deposited that are returned unpaid may occur more
quickly as well.
Before
Check 21, some customers wrote checks against funds that they
had not yet deposited. These customers counted on the "float
time,” or the time it takes for a check to actually clear an
account after it has been written for payment. With Check 21,
that float time will be reduced with more efficient check processing,
and writing checks against insufficient funds will result in
costly overdraft fees. Customers should not write checks unless
the funds to cover those items are in their account.
Quicker
notification of unpaid returned checks may help businesses reduce
losses. The sooner you are aware of a bad check the quicker you
can start your collection process and avoid accepting additional
bad checks from the same maker.
Solutions
That Help You
You
will need to consider how receiving substitute checks will impact
you or your business. California Bank & Trust has a variety
of products and services that can help you manage the effects
of Check 21.
Consumer
Customers
Money
Reserve
- Personal
line of credit linked to your checking account (subject to
credit approval)
- Automatic
coverage for an occasional overdraft or unexpected expense
- Transactions
detailed on your checking account statement
DirectNETSM Internet Banking
- Retrieve
real time information on your current balances and transactions
(not including ATM transactions)
- Pay
bills online
- View
online account and bill pay activity
- Transfer
between your CB&T accounts
VISA
Check Card
- Eliminates
the need for writing a check or carrying cash
- Can
be used at any location that accepts VISA Check Cards
- No
POS fees
- Automatically
deducts funds from your CB&T checking account
- Transactions
can be monitored with DirectNET Internet Banking
Small
Business Customers Direct
Business Internet Banking
- Retrieve
previous day closing and current available
balances
- Pay
bills online
- View
online account and bill pay activity
- Transfer
between your CB&T accounts
VISA
Business Check Card
- Eliminates
the need for writing a check or carrying cash
- Can
be used at any location that accepts VISA Check Cards
- No
POS fees
- Automatically
deducts funds from your CB&T business checking account
- Transactions
can be monitored with Direct Business Internet Banking
Cash
Management
California
Bank & Trust has been offering image products to our business
customers with cash management services for many years:
- CalBank
Network allows you to look at images of your checks paid
- Positive
Pay products enhance your existing fraud prevention processes
- Deposited
Items are also available on CalBank Network or a CD ROM on
a daily, weekly or monthly basis
- All of
your paid check images can be written to a CD ROM on a daily,
weekly, or monthly basis
- And now,
with revolutionary image-based technology, CB&T's Remote
Deposit service allows clients to make check deposits from
their business location without making a trip to the bank.
This eliminates the time-consuming manual deposit process,
while improving speed and efficiency of both collections
and returns
We're
Here To Help
Efficiencies
made possible by Check 21 will allow California Bank & Trust
to continue supporting the evolution of the U.S. payments system.
We will continue to invest in image capabilities that provide
new features, products and services for our customers.
As
you review the effect of Check 21 on you or your business, please
use our expertise to help you. We understand the changes occurring
in the payment-processing environment and will support your needs.
To
learn more about Check 21 or the above products and services,
please contact your California
Bank & Trust Representative.
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