A substitute check or cheque, also called an image cash letter (ICL), clearing replacement document (CRD),
or image replacement document (IRD),
is a
negotiable instrument
A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a ...
used in electronic banking systems to represent a physical paper
cheque (check). It may be wholly digital from payment initiation to
clearing and settlement or it may be a digital reproduction (
truncation
In mathematics and computer science, truncation is limiting the number of digits right of the decimal point.
Truncation and floor function
Truncation of positive real numbers can be done using the floor function. Given a number x \in \mathb ...
) of an original paper check.
Standards and formats
Software
Software is a set of computer programs and associated documentation and data. This is in contrast to hardware, from which the system is built and which actually performs the work.
At the lowest programming level, executable code consist ...
providers have developed
"Virtual Check 21" standards within electronic banking systems which allows creation and submission of
demand draft
A demand draft (DD) is a negotiable instrument similar to a bill of exchange. A bank issues a demand draft to a client (drawer), directing another bank (drawee) or one of its own branches to pay a certain sum to the specified party (payee).
A dema ...
documents to the bank of deposit.
Standards may include:
* Remotely created checks (RCC)
*
X9.37 files
Geographical significance
United States
The beginnings of substitute checks in the United States were formalized by the
Check 21 Act
The Check Clearing for the 21st Century Act (or Check 21 Act) is a United States federal law, , that was enacted on October 28, 2003 by the 108th U.S. Congress. The Check 21 Act took effect one year later on October 28, 2004. The law allows the ...
which came into effect in 2004.
See also
*
Remote deposit
Remote deposit or mobile deposit is the ability of a bank customer to deposit a cheque into a bank account from a remote location, without having to physically deliver the cheque to the bank. This was originally accomplished by scanning a digital ...
*
Cheque truncation
Cheque truncation (check truncation in American English) is a cheque clearance system that involves the digitization of a physical paper cheque into a substitute electronic form for transmission to the paying bank. The process of cheque clearan ...
References
External links
Understanding Laurentian Bank Cheque
{{DEFAULTSORT:Substitute Check
Banking in the United States
Federal Reserve System
Negotiable instrument law
Cheques
Banking technology
Banking terms