Checking out Check 21: 6 reasons to consider e-processing your checks

The days of needing a paper check in hand to receive your funds have been over since 2004 when the Check Clearing for 21^st Century Act in the United States took effect. Although it has been 7 years since the Check 21 Act passed, there are still plenty of perplexed merchants and businesses out there who aren’t quite sure what Check 21 is and how it benefits them.  

Just a quick rundown: Check 21 refers to electronically processing paper checks by submitting a scanned image of the check. The physical check does not need to be presented at all. The legislation enables businesses and financial institutions to immediately process checks by providing images rather than physical pieces of paper. The law also allows the creation of substitute checks that can be processed immediately.  

The actual process is as follows if done through a payment gateway such as Paymentsite:  

1. A business receives a check via mail, at their store or payment center
2. The original check is "scanned" through an Imager and transmitted to the check processor via a payment gateway such as Paymentsite.
3. An original check image and the attached transaction data is converted and sent to the Federal Reserve network for clearing and settlement.
4. The consumer’s account is debited and the cleared funds are deposited into the business’s account.
5. Images of the checks are conveniently accessible to the business owner (and/or their accountants) in their transaction reports.
6. Voila! Checks processed sans the paper mess.

Check 21 requires just a few things to get this running in their office or store: Internet access, a check scanner/imager, a payment gateway that supports Check 21, and a check processing company agreement.  

Why is Check 21 such an advantageous tool for your business? 

6 Key Benefits your business gets from implementing Check 21 services:  

1. It’s faster - Next day funding, in most cases.
2. It saves time - Forget heading the bank and waiting in those long after-work hour lines.
3. Convenient online records of each transaction – you can access scanned images of all checks processed.
4. Fewer NSFs (Non-Sufficient Funds) since the checks are presented overnight, as opposed to a few days.
5. Accounts on file - With the consumers’ permission, the payment gateway can allow merchants to store the checking account information for subsequent transactions without the need to write another check. (While Paymentsite offers this feature, not all payment gateways have this capability; check with your gateway provider to make sure.)
6. Reduces human error - Automated method to capture dollar amounts on the check saves data entry time and decreases chances for input error.

With the confusion over Check 21 evolving to enlightenment, the days of paper checks ought to be numbered.