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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Jill who wrote (24369)	10/7/2004 9:41:46 PM
From: nextrade!	Read Replies (1) \| Respond to of 306849

October 28, Check 21 Posted on Thu, Oct. 07, 2004 Checking account changes will speed processing kansascity.com By EILEEN ALT POWELL The Associated Press NEW YORK — High-tech changes in the banking industry will soon be affecting the most mundane of financial products, the checking account. On Oct. 28, banks will begin implementing the Check Clearing for the 21st Century Act — better known as Check 21 — aimed at updating the processing of checks from the equivalent of the Pony Express era to the computer age. Consumers and businesses won't see big changes right away. But over the next year or so, some of the paper checks they write will no longer come back with their statements. Instead, they'll get photocopies of their checks. Because these images can be transferred electronically, they'll clear so fast that consumers will have to learn to live without “float.” Float is the delay in check processing that has allowed consumers to write a check at the grocery store on Wednesday in hopes that it won't clear their account until their paycheck is deposited on Friday. What the Check 21 legislation does is require financial institutions to accept so-called image replacement documents, essentially photocopies of checks that can be transmitted electronically. The image will include numbers encoding how it was processed by the receiving bank. Once photocopied, the original paper check will be destroyed. It's the first step in what John Feldman of the Bank of America in Charlotte, N.C., sees as “a much-needed evolution in checking.” At first, consumers who still get their checks back each month — about 36 percent of bank customers — will start seeing paper replacement documents among them. Those already getting images of their checks with their statements will see some of the photocopies too, distinguishable by the marking “This is a legal copy of your check.” The same thing will occur for Internet banking customers who view their cleared checks online. At first, many paper checks and even check images will still move by air and road around the system. But banks have been upgrading their processing systems to begin exchanging the images electronically. “Over the next year or so, say by the end of 2005, you'll begin to see banks do small-volume production exchanges,” said Feldman, who is responsible for image transactions at the bank. “Into 2007, that's when we think we'll see industrial-strength volume, significant volume moving from paper to electronic.” As that happens, consumers will see more and more substitute checks. Eventually, no paper checks will be returned. Consumers also will find that instead of taking two or three days for their checks to clear, it could happen on the same day they write their checks. This loss of float has some consumer activists worried that more consumers will overdraw their accounts and be subject to penalty fees, sometimes as high as $35 per overdraft.