Distributed Check Processing In A Check 21 Environment

The U.S. check payments system stands on the brink of a step-function improvement in the processes by which check transactions are captured, cleared, and archived. Traditional systems are paper-based, relying on expensive centralized systems, redundant data-entry and physical handling, with high overhead costs in the areas of transportation and staffing. This system is subject to fraud, incurs errors which create higher downstream processing costs, and creates limitations in the ability to bring new products and services to market.

Check 21, The Check Clearing Act for the 21st Century, is the catalyst for this significant opportunity. This hallmark federal legislation enables banks to create, transmit, and utilize a digital image of the physical check. As a result, the industry has an opportunity for process improvement and savings unparalleled since the introduction of MICR.

Every new opportunity presents a myriad of challenges. It is the intent of this paper to present an objective and informative foundation of knowledge that may be applied to the intelligent design and implementation of the appropriate distributed check capture solution.

This Panini white paper presents an in-depth analysis of the emerging opportunities and challenges banks are facing as a result of Check 21. The paper explores the compelling financial case for implementing a distributed check processing solution and includes several models for calculation of savings potential.