Print
Solutions September 2005
Check
21 Checkup
Many
printing pros have questions about
Check 21. Here’s a review
of the law, plus a rundown of
recent products developed for
compliance.
Compiled
by Print Solutions Editors
The
Check Clearing for the 21st Century
Act (Check 21) took effect Oct.
28, 2004, but confusion still
permeates the printing industry
regarding its implementation and
effects. The law was written to
take the country’s check-collection
process high-tech, making it easier
for banks to transfer check images
electronically instead of physically
transferring paper checks. The
legislation also was designed
to prevent delays such as the
one that occurred on 9/11, when
paper checks were stuck on grounded
airplanes.
Check
21 allows financial institutions
involved in check clearing to
create “substitute checks,”
new legal instruments. Also known
as the image replacement document,
or IRD, the substitute check is
a paper document that contains
images of the front and back of
the original check, complete with
all endorsements. Checks eligible
to become substitute checks include
consumer and corporate checks,
government warrants, U.S. Treasury
checks, money orders, controlled
disbursements and travelers’
checks. Although Check 21 facilitates
the processing of substitute checks,
it doesn’t mandate it.
Check
21 allows the original check to
be “truncated” at
any point during the presentment
process. Truncation means the
paper check is cut short from
completing the forward collection
path to the payer bank. The original
check is held in place at the
bank of first deposit or any subsequent
clearing bank. The source document
still exists, but the physical
transportation of the original
is no longer necessary. Presentment
occurs by transmission of an electronic
image, rendered from the original
item, or by transmission of the
MICR-encoded information. The
substitute check, which can be
of any size, must contain these
words: “This is a legal
copy of your check. You can use
it the same way you would use
the original check.”
Large
check clearinghouses and major
banks were the first to use substitute
checks. As more do, they could
choose to charge a fee if the
checks they process aren’t
Check 21-compliant. In a bleaker
scenario, large banks could give
clients a deadline for making
checks compliant, then bring in
a major check manufacturer to
provide the checks if the deadline
isn’t met.
“Check
21-compliant” has come to
refer to documents that meet the
standard for “image readiness”
specified by ANSI X9.7 (American
National Standards Institute)
specifications for check background
design. Compliant checks easily
can be scanned and converted into
electronic format.
Most
security document manufacturers
say the enactment of Check 21
hasn’t negatively impacted
paper check production. Despite
the decline in the use of personal
checks, the U.S. check market
continues to remain strong (approximately
1 billion checks produced annually).
“The
check industry as a whole, from
banks to check printers, is scrambling
to respond to Check 21 and find
an efficient method to ensure
that the original checks have
imaged properly to avoid any legal
repercussions,” says Elizabeth
Brenner of Waterloo, Ontario-based
supplier RDM Corporation. “It
will be a competitive advantage
for any printing company to be
able to test their own checks
and ensure that their product
complies with ANSI specifications.”
Opportunities
abound for manufacturers and distributors
that help customers design compliant
checks. Some consumer and business
checks still need to be redesigned
or reformatted for scannability
in order for banks to accept and
further digitize those checks
according to Check 21 legislation.
Financial experts say most consumer
checks are Check 21-compliant,
but many business checks aren’t.
Several
manufacturers recently launched
products and services to help
distributors ensure that their
customers are Check 21-compliant.
The following pages feature three
of those companies.
Name:
Ennis Inc.
Location: Midlothian, Texas
Product/Service: Online
Check 21 Resource Center and RDM
Image Qualifiers
Description: Realizing that
Check 21 implementation has led
to more questions than answers
among printing pros, Ennis created
an online Check 21 Resource Center
that acts as a library of information
about the law.
“Our
50,000 distributor customers are
our eyes and ears for our products,”
says Zack Smith, Ennis’
marketing manager. “We want
them focusing on what they do
best—selling products and
building relationships with their
community and customers. They
don’t want to sit around
and worry about things like Check
21. Our goal is to provide solid
information for them so they can
worry about their goal, which
is selling.”
Ennis’
home page at www.ennis.com
includes an icon that says “Click
Here for the Latest on Check 21.”
When visitors do, they access
the Check 21 Resource Center.
It includes these links:
•
A page outlining Ennis’
Check 21 actions, including installing
RDM Image Qualifiers in all of
the company’s check manufacturing
facilities, testing and adjusting
all stock and software-compatible
checks to meet Check 21 standards,
ensuring every new and repeat
custom check order is compliant,
and including a compliance certification
report with invoices
•
A 2-page PDF entitled “Check
21 Brochure,” which provides
a non-branded overview of Check
21 that’s written for end
users
•
A 4-page PDF entitled “Secure
Documents Brochure,” which
was written and designed for distributors
to give to their customers. It’s
non-branded, shows the importance
of security features and enables
distributors to showcase their
security document capabilities.
•
A 2-page PDF entitled “Security
Features Matrix,” which
illustrates which security features
are available in every Ennis facility.
This brochure also provides contact
information for the facilities.
(The Check 21 Brochure, Security
Documents Brochure and Security
Features Matrix comprise Ennis’
Secure Documents Sales Kit.)
•
A 2-page article, written by an
employee of Ennis’ General
Financial Supply (GFS) subsidiary,
that covers new opportunities
for distributors in relation to
Check 21
•
Two PowerPoint presentations—“Selling
Internal Documents to Banks,”
which was developed for distributorships’
sales representatives to present
Check 21 opportunities to their
clients, and “Check 21 Overview
Presentation”
•
A glossary of Check 21 terms
•
Links to five web sites with more
Check 21 information
When
planning the Check 21 Resource
Center, “We knew we had
to address this issue for both
Ennis’ traditional customers
and primary customers in our Financial
Group,” says Marketing Director
Steven Osterloh. “We didn’t
want two different messages going
out to the marketplace.”
Ennis’ Financial Group,
which includes GFS and Northstar
facilities, helped the company
comply with ANSI standards a few
years ago. “They bring a
lot of experience and trust to
their customers, and have been
on the cutting edge of technology,”
he says.
That
technology includes Image Qualifiers
from Waterloo, Ontario-based supplier
RDM Corporation, which the Financial
Group used primarily for image-compatible
internal bank forms. “The
machines allow companies to design
and test check documents for image
compliance to ensure they meet
Check 21 requirements,”
says Tony Scarselletta, Ennis’
Eastern Coast sales representative
and general manager of its GFS
plant in Bridgewater, Va. Ennis
rolled out the technology to all
of its check producing facilities.
Note:
Other companies, including PrintXcel,
a Quality Park Brand, Englewood,
Colo., and Wise Business Forms,
Alpharetta, Ga., also have RDM
image qualifiers in their facilities.
