Check21

Printegra Marketing Update (11/04)

Print Version

Updated 11/04

BACK
Q: What is Check21?
A:
• New federal law that takes effect 10/28/2004
• Designed to increase the efficiency of the check processing system, reduce costs and make it less susceptible to delays. Example of delays- 9/11/01 since all planes were grounded during 9/11 period, check transportation was delayed. Ground transportation had to be used. This caused major delays.
• Check fact- $8 billion per year spent on check processing and transportation
• The Check 21 act will affect all financial institutions and their customers, as well as fraud investigators and prosecutors.
• Check 21 allows (but does not require) any financial institution in the check clearing chain to truncate any check (business or commercial) and convert it to an image.("Truncate" means to remove an original paper check from the check collection or return process and replace it with an electronic image.)

BACK
Q: Will this reduce the need for checks?
A: No. Check 21 will not affect the need for an original check to be presented. It legislates what can happen to that check once it is presented for payment.

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Q: What does it mean your client asks if their checks are "Check21 Compliant"?
A: The main standard that is referred to in the Check21 Legislation is the ANSI X9.7 standard for Image Readiness.(Image Readiness- means the ability of a check to be scanned and converted into a electronic format) While the ANSI X9.7 standard is voluntary some financial institutions are gearing up for conformance to Check21/Image Ready Standards. Financial institutions may request that your customer design their checks to Image Ready standards.

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Q: Who is ANSI?
A: ANSI is the American National Standards Institute. The ANSI X9 Board determines approval for voluntary American National Standards for Financial Services.
The American National Standards Institute (ANSI) is a private, non-profit organization that administers and coordinates the U.S. voluntary standardization and conformity assessment system.

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Q: What will happen in October 28th 2004?
A: It all depends on the banks/financial institutions.
• If the next bank in the check clearing chain agrees that they will accept an image, an image can be sent.
• If the next party doesn't agree to accept an image, a "substitute check" is created and transmitted.(See below for information on Substitute Checks)
On checks that customers write the payor bank:
• May get the original check back
• May get a copy of an image
• May get a substitute check

BACK

Q: What is a Substitute Check?
A: A Substitute check is a paper reproduction of the original check that:
1. Contains an image of the front and back of the original check
2. Bears a MICR line containing all the information appearing on the MICR line of the original check. A substitute check shows the routing number of the truncating bank and the number of the bank creating the substitute check.
• A substitute check that meets all the criteria in the law is the legal equivalent of the original for all purposes under state and federal law.
• In any given case, a substitute check may be all that's available for investigation and prosecution of fraud.
• Under Check 21 a party must accept a substitute check.
When some other party in the chain truncates a check a customer has written - (This can be any bank in the chain) - a substitute check will be the only paper form of the check anyone can insist upon receiving
Examples of Substitute Check created by scanning an original document:

Front
Back

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Q: What will be the net result to bank customers?
A: • Whether customers can get all their original checks back is out of the paying bank's control (the party that truncates keeps the original and can destroy it after a period of time). Electronic check images are generally kept for up to seven years.
• The length of time the original must be kept is not set by law. It will be set by clearinghouse rules and other agreements.

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Q: How will Printegra assist distributors and their customers with their Check 21 needs?
A: Printegra is ready and able to comply with the entire Image Ready requirement put forth by the Check 21 Act.
• Upon request, Printegra can test any new or repeat order at NO CHARGE to verify if an order is Check 21 compliant. We have installed ANSI Certified RDM Image Qualifiers at all Printegra facilities.
• If changes are needed we will provide you with recommendations on what is required to make the check compliant.
• Printegra will provide you a proof on any repeat job that needs to be changed to become Check21 compliant.
• All FormSource Software Compatible Templates are Image Ready.
• All FormSource Limited base stock is also Image Ready.
• Copy Alert Security Check paper is currently being manufactured to adhere to the NEW Check 21 complaint standards.
• Standard Printegra Pantographs are Image ready.
• ODT Void Pantographs - we have developed a version that is Check 21 compliant.

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Q: Why doesn't Printegra automatically change all check orders to be Check 21 compliant?
A:
1. Check 21 ANSI standards for Image Ready documents are voluntary. Most banks are not requiring check image standards from their customers.
2. To make your customers checks complaint, it may require changes that might slightly change the aesthetic of the document. We would like you and your customer to approve these changes prior to manufacturing the order. Our goal as always is to produce a product that will meet and exceed you and your customer's requirements.

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Q: What if you would like a new check designed to Check21/Image Ready Standards?
A: Please prominently mark on your purchase order "Make Check 21 Compliant" on any order that you would like the check job designed/tested to confirm Check21/Image Ready standards.

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Q: What are banks doing to enforce Check21 image ready standards for documents?
A: Since Check21/ANSI X9.7 is a voluntary standard, most banks are not enforcing Check21/Image Ready standards at this time. Some large Banks may begin to suggest to their customers that they redesign their checks to image ready standards.

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Q: If you would like to make a document Check21 Compliant/Image Ready, what changes (if necessary) will be needed to comply?
A: For the document to be image ready. The requirements are:
• The Check background must drop out when scanned. This will not be an issue on any Printegra standard pantograph. We have also created an Check 21 compliant version of our ODT Void pantograph. We also verify that our check backgrounds will drop out when scanned by the banks imaging equipment. We have tested Cross/Hatched colored safety paper and it complies with image ready standards. Custom step and repeat or ghost/reversed pantographs will need to be tested to ensure they are compliant.
• No solid boxes or reverses in the Area's of interest (AOI) on a check. Use plain text in place of the reversed out boxes.(See example below)
• 5/8" Clear Band in the MICR area.
• File size below 90K

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Q: What does it mean if my bank has a file size limitation on my checks?
A: This refers to when a paper check has been converted (front and back) to an electronic image. Banks prefer to keep the file size limitation to a minimum. This makes it easier for them to store and transmit an image of the check. Most banks have a file size limitation of 90K.

***Please note - When you request your check to be Check 21 compliant Printegra will create a check (front and back) whose file size is less than 90K. Our aoal i's less than 50K This will give your customers a 40K buffer (if needed) to print their companies variable information. Adding heavy type, large solid boxes or large logo to a check after it is printed by Printegra can increase the file size over the 90K limit.

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Q: What are the Area's of interest (AOI) on a check?
A: Areas of interest (AOI) are the areas on a check that contain the critical data needed for imaging. These areas include the Date, Payee, Legal Amount, Signature Lines and the MICR Line Area.
• Numerical Amount
• Date
• Payee
• Legal Amount (Amount Spelled out)
• Signature
• MICR Line Area (5/8" Clear Band)

(Example of Area's of Interest)

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Q: How can you quickly verify if a repeat job is Image Ready?
A: You can visually check to see if it complies with Check 21/Image Ready standards but short of testing every negotiable document, there is no conclusive way to determine if a negotiable document is "Image Ready"

Example of Image Ready Check:

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Q: Can Printegra Test a custom or MyFormSource check and verify that it is Check21 Compliant?
A: Yes. Since 2001 Printegra has RDM Image Ready Testing Equipment. We also have recently installed RDM Image Qualifiers at every Printegra location. This is the same equipment used by banks to test if a check is Image Ready. Printegra can test at NO CHARGE any new or repeat check and verify that it is Check 21 compliant. If you would like to have a check tested for Check21/Image Ready Compliance please send the check sample to your local Printegra facility
ATTN: Check 21 Printegra/ Image Ready Testing
**Please include your email address so that we can forward you the test results.

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Q: Should you proactively bring Check21/ Image Ready to the attention of your customers?
A: YES - Our advice would be to educate your customer about Check21 and Image Ready documents. The main thing that you want to convey to your customer is that there is no need to worry. If and when banks begin to require checks become Image Ready/Check21 compliant you are ready.

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Q: What are some common misconceptions regarding Check 21 and how it will effect checks? Are these FACTS or FICTION?
A:
• Check 21 compliance is mandatory! FICTION - Check 21 does not mandate electronic processing of digital check images. It simply allows for it to happen.
• Check 21 will reduce the need for Checks FICTION Check 21 will not affect the need for an original check to be presented. It legislates what can happen to that check once it is presented for payment.
• Certain ink colors (Dark Blue, Black, Red, Dark Green and other dark colors) are not Check 21 compliant. FICTION - It does not matter what color a check is printed in as long as the background drops out when image and the check complies with the ANSI standards for image readiness.
• My check will not be able to use a security void background. FICTION Void backgrounds on your checks are very important to deter against fraudulent copying and scanning. Current hidden work or void technology is available that does not interfere with the area's of interest on a check.

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Q: Where can you go for additional information on Check 21?
A: These websites also contain useful Check 21 Act information.
American Bankers Association www.aba.com
America's community Bankers www.acbankers.org
Consumer Bankers Association www.cbanet.org
Credit Union National Association www.cuna.org
ECCHO www.eccho.org
Federal Reserve Board www.federalreserve.gov/paymentsystems/truncation
Federal Reserve Banks www.frbservices.org/Retail
NACHA-The Electronic Payments Assoc. www.nacha.org
ANSI X9 www.x9.org

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Q: If you have additional questions about Check21 whom should I call?
A: Please refer questions to your local Regional Sales manager or Bill Reid, Director of Marketing at Printegra Corporate (800-422-6070 ext 2227 or breid@printegra.com) at Printegra Corporate.

Click here for a complete listing of Printegra regional sales managers.