What Is Check 21?

The Check Clearing for the 21st Century Act (Check 21) is a federal law established on October 28, 2004, which brings the check processing system into the 21st century. Check 21 was designed to increase the efficiency and security of the national check-payment system through the use of electronic image technology. Currently, financial institutions use the original checks to process payments. With Check 21, financial institutions can use an electronic copy of a check or a paper "substitute check" to process payments.