Five years after the passage of the Check Clearing for the 21st Century Act, industry experts say the volume of paper-substitute checks created by the law is in a free fall, proving that the law has paved the way for electronic clearing of check images.
Digital Transactions reports that the number of substitute check items, or image-replacement documents, totaled 160.5 million in June 2009, down 43 percent from the 283.3 million items used in June 2008. Check 21 did not mandate image exchange; it only required that all financial institutions accept IRDs. But entrepreneurs, payments processors and technology companies saw the law as an incentive to encourage all banks and credit unions to add image-accepting capabilities.
David Walker, ECCHO's president and chief executive, says Check 21 paved the way for many business enhancements, some unforeseen when the legislation was drafted:
The success of image exchange really is a direct derivative of having Check 21 in place.
