It all began with September 11. Planes were grounded after the terrorist attack. That also meant many parcel services were unable to make their deliveries.
Scott Thornhill is the manager at BankOne bank. He says, "So bills weren't getting paid. People weren't getting paid. Physical checks weren't moving. And so this is kind of a legislation that was brought about because of that."
So what is Check 21? The complete name is Check Clearing for the 21st Century. It allows banks to do their business electronically.
Thornhill says, "There will be no effect to customers with paper checks. The only thing they'll see a difference of is their checks clearing quicker than normal. At this time, a check can clear in 1-3 days. Electronically, it can happen overnight."
So the next time you go to write a check, make sure you've got your balance budgeted because check "floating" will soon be a thing of the past.
Thornhill says, "Our advice has always been 'Don't write a check unless you have the money in the account' and that continues to be our advice."
The Check 21 law will be implemented on October 28. But banks have some leeway until they must be completely electronic.
Thornhill says, "We will not be up and running and sending out checks at that time. BankOne is on a 2-3 year timeframe as to when we will be able to do that."
Many believe that Check 21 is essentially the end of the paper check system because the check will eventually be destroyed. There will be an online image of the check and that will serve as proof, if needed. But with Direct Deposit, and ATM/Debit cards our society is leaning towards going completely paperless.