SIKESTON - Changes in the way checks are processed will soon have an effect on the way many people do business.
For nearly as long as checking accounts have been used, there have been those who used the time it takes for a check to actually clear as a way to bridge the gap between payday and bill due dates.
Efforts by the Federal Reserve have narrowed the "float" window from two weeks down to about two days, but this remaining gap is about to close as well.
The Check Clearing for the 21st Century Act, signed into law in October of last year, goes into effect Oct. 28.
Once it is in effect, banks will have the option of using a "substitute check" to replace the original paper check.
"It will have all the pertinent information, front and back, including the endorsement," explained David Jones, public relations and communications officer for Montgomery Bank. "It is a legal, valid substitute for the check itself."
When a substitute check is created, the original document it replaces is destroyed.
Under the provisions of the Check 21 Act, banks will be able to electronically send substitute checks back and forth instead of mailing the actual checks.
"The 'float' - the number of days it takes a check to clear - will basically go away," said Anna Ferrell, marketing director for First Security State Bank. "Things are going to be happening a lot faster."
Union Planters Bank will be putting out an informational document with statements this month to advise "the change is going to occur, and promote the positive things about it," said Karen Grebing, marketing coordinator for Union Planters Bank.
"One of the bigger items is the swifter resolution of errors," she said.
Electronics searches are both easier and faster than "chasing a paper copy," Grebing noted. "The checks aren't moving from place to place to place like they used to."
Union Planters has already been using imaged checks for almost all of their customer statements. "Very, very few were still getting the checks back. The standard was the imaged check," Grebing said, "so that's not a big change."
While Montgomery Bank has some check imaging services for customers, it is not actually providing substitute checks yet.
"We're getting everything together to move in that direction," Jones said. "Our plans are to do it. We like to stay up-to-date on the latest technology."
For the time being, Montgomery Bank is working out the details, studying the cost of various systems, and working out the schedule for "how we will roll it out to our customers," Jones said. "We want to make sure we're taking the best route."
The Check 21 Act does not require banks to use substitute checks; it just remove obstacles for banks that wish to take advantage of check imaging technology, Jones said.
There are many benefits for both the banks and customers, however.
"It enables us to clear checks faster," Jones said. "And I think it will reduce the amount of check fraud."
Once customers get used to the idea of not being able to "float" checks, "they'll find balancing their accounts is easier," Jones said.
Customers at banks with Check 21 substitute checks in place will no longer have to file stacks of canceled checks for possible proof of payment, but will be able to request the document as needed.
"It will hold the same value as if they had their canceled check," Ferrell said. She added the Check 21 Act also establishes without a doubt that "a canceled check will be an acceptable proof of payment."