Check 21 to Speed Up Banking Process - KCBD NewsChannel 11 Lubbock

10/28/04

Check 21 to Speed Up Banking Process

Are you guilty of writing a check hoping it's cleared after you've deposited money into your account? Well, many people are and starting on Thursday, October 28th, a new federal law goes into effect that won't allow you to rely on that process.

It's called Check 21 - a new way of banking in the 21st century. It won't change the way you write checks, but it will change the way they're processed.

"Banks will now have the ability, as you present a check to them, to convert that check to a digital image and then present that to the paying bank," explains Pete Villarreal from PlainsCapital Bank. With Check 21, nothing changes about the way you write checks. Villarreal says this process simply allows banks to safely transfer the image of your check digitally rather than physically.

The technology scans the front and back of your check so they can send the image to the paying bank for transaction. "This should allow us to not be dependent on physical transportation and to expedite check collection," explains Villarreal.

But don't expect to see the effects right away, experts say you won't see changes to the time it takes to process checks for a while. "Initially, over the next 12 months, you're not going to see a large impact with regards to how fast your checks are collected or make it back to your account," he says. Today, an average check takes up to two days to clear. But in the next few years, thanks to this technology, the clearing process may be eliminated all together - closing the gap between using a check and a check card.

But Villarreal assures us it doesn't mean the end of writing checks. "People love their checks. They feel that it gives them good proof of purchase and for large purchases such as a home or a car, I think you will see the check continued to be used," he says.

Check 21 shouldn't be confused with Electronic Check Presentment. Many large companies like Wal-Mart convert your check to a debit transaction by scanning it and then returning it to you. This is separate from Check 21, and isn't affected.

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