What is Check 21?

Check 21 Act is a U.S. federal law

The Check Clearing for the 21st Century Act, known as Check 21 Act, is a U.S. federal law that came into effect in October 2004. The aim of this law is to replace the old check-clearing process whereby banks had to physically receive the original paper checks and send them to the check-writer's bank. Under this law, it is possible to remotely capture check details and create a "substitute check" to deposit at the bank. This substitute check is the legal equivalent of the original paper check. Based on the Check 21 Act, banks can electronically transmit check images to the paying banks. This makes the check-clearing process fast and cheap.  

How can merchants use Check 21 EPO?

The Check 21 EPO service provided by Payment21® allows you to securely and reliably accept U.S. checks as electronic payment orders from your customers as payment for goods and services by utilizing the Federal Reserve Board's Check 21 standard as introduced by the Check Clearing for the 21st Century Act (Check 21 Act).

When your customers select check payments as their preferred payment method, they can enter their checking account details on your cashier page. Payment21® receives the order immediately via the secure API linkage established between your website and Payment21®. Alternatively, you can batch process your transactions right into your merchant back office, thus making it extremely simple to upload your preferred file-format into your lockbox in the Cloud.

As a next step, you get the option to automatically screen transactions for potential fraud by verifying the check data provided by your customers. In addition, merchants can take advantage of add-on services to obtain authorization electronically or to identify customers in a commercially reasonable manner.

Different to many other randomly developed check creation systems, Check 21 EPO by Payment21® is a highly sophisticated and fully compliant solution for remotely created payment orders (RCPOs, known as demand drafts) in line with the technical documentation of the Accredited Standards Committee X9 (ASC X9) and the American National Standards Institute (ANSI). We maintain and promote standards for the financial services industry in order to facilitate delivery of financial services and products at the highest professional level.

Most importantly, Payment21® features Print on Demand (POD). Our software application supports printing of paper checks before the imaging process is initiated - as required by the FED, in order to qualify for Check 21 Law.

Payment21®’s core competency is generating Image Cash Letter (ICL). Our Web-based imager is a file processing software service in the Cloud. Check 21 EPO by Payment21® resolves interoperability and data integrity issues that happen during the check image exchange process. The end product is a digital check, commonly referred to as an Image Replacement Document (IRD), which can be directly transmitted over a secure connection and deposited to the bank.

Payment21® offers a comprehensive suite of check printing, image creation and clearing solutions. Our service, Check 21 EPO, enables faster settlement, improves availability of funds, accelerates notice of insufficient funds, and can be deployed in a centralized or distributed environment.

Check 21 enables paper checks to be converted into digital images

Substitute checks created by Payment21® contain all the elements required by law. This includes: 

-Front and back images of the customer check.

-A Magnetic Ink Character Recognition (MICR) line.

MICR is a character recognition technology used by the banking industry to assist in the processing of checks. MICR allows both computers and people to easily read information such as routing/transit (RT) and account numbers.

Begin accepting digital payments in 5 easy steps