ANSI - American National Standards Institute
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Check 21 Goes Into Effect October 28, 2004

American National Standard from ASC X9 approved

New York, Oct 25, 2004

The Check Clearing for the 21st Century Act (Check 21) was signed into law on October 28, 2003, and becomes effective on October 28, 2004. Check 21 is designed to foster innovation in the payments system and to enhance its efficiency by reducing some of the legal impediments to check truncation. In anticipation of Check 21 implementation, the financial industry welcomes the final approval of American National Standard ANSI X9.100-140-2004, Specifications for an Image Replacement Document, developed by the Accredited Standards Committee X9 (ASC X9). According to ASC X9, the combination of the ANSI approval and pending implementation of the Check 21 law makes the standard a key operating benefit for the financial community.

The Check 21 legislation facilitates check truncation by creating a new negotiable instrument called a substitute check, which would permit banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving paper checks. A substitute check would be the legal equivalent of the original check and would include all the information contained on the original check. The law does not require banks to accept checks in electronic form nor does it require banks to use the new authority granted by the act to create substitute checks.

ANSI X9.100-140 provides financial services organizations guidance on developing a machine-readable substitute check. The financial services industry refers to this type of document as an Image Replacement Document (IRD). This standard establishes the construction, layout, data elements, data content, and printing specifications for IRDs.

"We had to make certain that all clarifications and dimensional requirements were met to make the standard fill the needs specified by the Check 21 law," said Andy Garner, Senior Technical Consultant at Wachovia, and leader of the IRD standard development effort. "Work has been underway for more than three years by X9's subcommittee B on Checks and Related Transactions to get to this point," Garner said, "and we are very pleased with the result."

With an IRD checks could be managed at Point of Sale, Automated Tellers, Bank Branches, Lock Box Operations or Check Capture Operations and electronically forwarded for downstream processing. At any point in the process that an actual check is needed, the IRD could be printed and offered as a legal equivalent of the original.

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