Banks to start processing checks electronically; Increase in overdrafts and fees expected

From http://www.illegalvoices.org/apoc/:

Banks to start processing checks electronically; Increase in overdrafts and fees expected.

In the current system, billions of paper checks, nearly 43 billion in 2001, according to the Federal Reserve, are physically carried by mail and courier between banks for processing. The cashing bank does not get credited until the paying bank receives the paper check. Sometimes this process can take up to a week.

But because of a new banking law, nicknamed Check 21, most of that float time will disappear. Check 21 takes effect Oct. 28, when banks will be allowed to conduct check processing electronically.

A scanned image of a check transmitted over a network can be accepted for payment within seconds, and banks will no longer have to send traditional paper checks to collect on them.

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