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Check 21 Kicks In

The Check 21 Act became law in October.
Essentially it allows banks to substitute an
electronic image for the original paper
check (called the source document).

The huge benefits are to the BANKS. They
don't have to bundle up checks and have
them transported to a regional or national
clearing house where they are actually
processed. 62

Think about the time and cost savings
they will realize. Most banks are drooling
over the effect the law will have on their
bottom line. The guys at Fedex may be a
little nervous and with good reason.
Transporting checks is (was) big business.

So who else benefits?

Consumers benefit from increased efficiencies
and reduced fraud potential as their
be fewer checks to be lost in transit.
But the check writer loses the valuable
"float" time on their checks. No longer
will you be able to write a check on Monday
be able to get to the bank on Wednesday and
cover that check. Most times the funds will
be withdrawn in 24-48 hours.

Companies that make imaging devices for
"reading" check information will also
reap financial windfalls.

But what about businesses? Some business
owners believe that their ACH processing
or funds availability will be sped up.
That is their wait time for funding will
be reduced. Unfortunately not true. ACH or
EFT transactions take 4 days to "settle".
This means that the two banks, an ODFI and
RDFI (originating bank and receiving bank),
have 4 days to communicate with each other
that the transactions were processed and
funds have changed hands. That doesn't
change. A bank may make funds available
sooner but if the transaction comes back
as NSF's or other rejects the funds you
were credited for get immediately debited.

So what good is it to me if I am a business?

If you process mailed payments you can
convert the paper check to an ACH/EFT
and thereby save bank trips and fees
(deposit and NSF fees). The affect on
your ACH processing or cash flow is really
minimal. So unless you own stock in the bank
it's much ado about nothing.

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ABOUT THE AUTHOR:
Wayne Akey has helped numerous businesses
reduce costs and increase efficiency.
Get your Free Ebooks on "The Secrets of ACH Processing"
and "How to Save over 80% on Payment Processing" at
http://www.ach-payments.com
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For more information visit
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