Check Truncation More Than Check 21 Larry Krummel AllMyPapers

Two Major Check Truncation Laws Automated Clearing House (ACH) Controls automatic debit transactions It is truncating checks NOW Check 21 Effective October 2004

Check Truncation The Original Check ceases to be processed as a physical check, I.E. it is “Truncated”.

What Happens to the The Physical Check Depends on the rule under which is was truncated Maybe Voided and Returned Maybe Shredded

Automated Clearinghouse Check Truncation Point of Purchase Re-presented Check(NSF) Accounts Receivable

ACH General Rules Consumer Checks No Business/Government Checks First Party Checks Only Some are Dollar Limited Operates like a debit to checking account Immediate withdrawal from account

Point of Purchase(POP) Check Truncation Consumer can opt out Retail store check requests signature to agree to truncation Consumer gets check returned immediately

Re-Presented Check (RCK) Check Truncation NSF checks re-presented electronically Consumer notified prior to writing check

Accounts Receivable (ARC) Check Truncation REG E Revisited Used by large receivers of periodic payments Consumer cannot opt out Notification in periodic payment packet Typically credit card, utility companies No check returned No Business Checks

Bank Check Substitution Check 21 Consumer receives Substitute Check

Effects Everyone Consumer Business Government

Who Truncates Bank Bank Representative ATM

Who is Responsible Whoever causes the creation of the paper substitute check.

Justification for Check 21 Montana Project Federal Law requires checks to clear in 3 days. Montana is 4 th largest state. If laid over the East Coast it would stretch from Boston to Detroit and from Boston to Washington DC

Check 21 Makes Paper Substitutes Legal It Does Not Make Images Legal or Required

What Defines a Legal Substitute Check Proposed X9 standard X9.90 Specifies Dimensions/Tolerances Paper Stock Perforation Tear Strength Fonts Image Scaling Aspect Ratio, Registration Point

Font Issues Using commercial vendors as “standards” reference Identifying non-existent standards

All Fonts Are Not Created Equal X9.90 references the Bitstream OCR A font as an example of an acceptable font. Only true for OCR fonts copyrighted after Previous versions were not mono spaced. Search Google for “OCR A Bitstream” and the first site sells Bitstream pre fonts.

Non Existent Font Standard References ANSI OCR-A as relevant standard but identifies a 10 point Bitstream font which has no ANSI size equivalency.

Image Presentation Requirements Original image scaled to “make maximum use of space while maintaining aspect ratio”. “The resulting scaled image shall be anchored at lower right corner of region.” Implication: Back side of image must be anchored lower left corner.

Can Any Printer be Used to Print Substitute Checks Yes but it may not create a legal substitute check. The MICR line must conform to existing check standard. If it does not, it may be rejected by the receiving institution.

Calibration Text Free test to determine if a printer meets minimum requirement to print Substitute Checks.

Thank You Larry Krummel AllMyPapers