Community United
Federal Credit Union
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Fall 2004
The Value of Membership
Check Processing Enters the 21st Century
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The Value of Membership

At Community United FCU, you’re not just a member — you’re an owner of the credit union! Members expect more value and deserve more respect than the average customer receives at non-cooperative financial institutions. Our first priority is serving the best interests of our members, not making profits for ourselves. It’s the reason we exist, and it will always be our commitment to you!

Check Processing Enters the
21st Century

What you need to know about the new law that
changes the way we process your checks

A new federal law, The Check Clearing for the 21st Century Act, also known as Check 21, will change the way checks clear your account. Currently, when you write a check to an individual or a business and they deposit it, their financial institution must physically transport the check to your financial institution in order to “clear” the check. With Check 21, this is no longer necessary. Check 21, which becomes effective October 28, 2004, gives financial institutions the option of creating, processing and exchanging a legal copy, a “substitute check,” for payment. This substitute check is actually an electronic duplication of the original check (showing both front and back), which can be processed electronically.

The purpose of the act is to create greater efficiency and security in the check processing system and to reduce processing time. The new system will mean that checks will clear your account more quickly because financial institutions will not be required to transport the physical check in order to process it. Today’s existing check payment system exchanges over 40 billion checks a year. Supporters report that the new law could reduce the cost of transporting paperwork cross-country by $2 billion a year.

A substitute check will be the legal equivalent of the original check. A substitute check must:

  • Include an accurate representation of both the front and back of the original check;
  • Bear a magnetic ink character recognition (MICR) line with all of the information from the original;
  • Conform to the industry standards for substitute checks;
  • Be as suitable for automated processing as the original; and
  • Contain a disclosure that states,“This is a legal copy of your check.You can use it the same way you would use the original

What does Check 21 mean for you?
The biggest change for most account holders is that in some cases they may no longer receive the original cancelled checks in their monthly statements.

The speedier processing possible with Check 21 also means that “floating a check” will virtually never work! A check that once would have taken days to clear will now clear in hours. The best advice for credit union members is always to be certain funds
are present in your account before writing a check.

If you have questions regarding Check 21, call a members service representative at (912) 285-5150.


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