Check Clearing For The 21st Century Act - Check 21

Someone sent you a check. Maybe it’s your paycheck. Or maybe it’s a $16 check from your delirious aunt who sends you the same amount of money on your birthday each year and writes “Fill Up the Tank” on the card, even though you’re 37 and live beside a subway station.

It doesn’t matter where the check comes from. What matters is that you’re about to pull out your smartphone, open a banking app, and deposit that check into your account. You don’t have to put on shoes. You don’t need to use an ATM or stand in line. You simply need to check a box on the back of the check that says “Mobile Deposit,” sign your name, and make sure that the account numbers are correct when using the bank’s smartphone app.

Did you ever wonder why you’re allowed to do this? Or how the bank actually knows that it’s you? Or why people can send either checks or online ACH for digital deposits these days?

It all comes back to a federal law called the Check Clearing for the 21st Century Act. This 2003 Federal law lets a bank create a digital version of an original check and maintain an image-based processing system. The Federal Reserve System implemented Check 21 in 2004, and has been allowing remote deposits ever since.

Now, if we can just get the camera to snap automatically when we put that check inside the dotted box.