Credit Unions Can Add Value for Members When Check 21 Becomes Law

Check 21 will take effect on Oct. 28. This change in the payment system provides an opportunity for credit unions, given the right solutions, to positively effect net income and provide added benefits to their members.




What may pass to most institutions as an uneventful Oct. 28 will in fact be the quiet beginning of an evolution in check processing. This is the date substitute checks become a legal negotiable instrument. However, the right solutions will enable credit unions to view this change in the payment system in a positive light.

While Check 21 does not mandate the capture of images at the credit union or branch level, testing has begun to find the different options now available to credit union members. Many believe that the future of deposit processing in a Check 21 environment is branch capture and image exchange. For instance, one enhancement is that this method of processing will offer members flexibility in balancing deposits. Credit unions may choose to outsource the balance of their deposits, or the credit union has the option to keep their balancing in house. This will allow credit unions to maintain control of the process as well as the staffing implications, thus enabling credit unions to turn Check 21 from a liability into an asset.

Truncating Checks at Branches Can Improve Net Income
Branch capture in combination with image exchange can create an environment where checks can be truncated at the branch, collected quicker and often times cheaper than with traditional check processing. Many institutions have been analyzed and have demonstrated marked improvement in net income by lower operating costs and increasing revenue.

One solution would be a capture device which is installed behind the teller line where an individual periodically collects work from each teller and processes each item. An electronic file is then created from the captured deposit items and transmitted for collection. As deposited items are captured, images are displayed for a teller or balance operator to amount-key and balance at the branch, or the images are displayed, where amount-keying and balancing can take place at a central location for all branches. Again, this is at the option of the credit union. Since deposit items are truncated at the branch, balancing discrepancies can be readily resolved since the teller has access to the work.

Electronic Exchange Offers Financial and Operational Advantages
If a check processor is a member of an electronic exchange network, they will be able to clear check-based transactions by allowing for the exchange of check images between member banks, thrifts, credit unions, service bureaus, clearinghouses, and the Federal Reserve. This exchange of images can be simplified for members if the processor maintains a database of financial institutions that will take electronic presentment.

Electronic exchange of images offers credit unions many financial and operational advantages:

  • Replaces Microfilming
  • Eliminates Encoding Costs
  • Speeds Up Collection
    • For example, Same-day collection of items captured by noon central time
  • Reduces Courier Costs
  • Deposit Deadlines Become Less Significant
  • Provides Image Research Capabilities

One of the tenants of Check 21 is that institutions are not mandated to make changes in their processing. However, as traditional check processing costs are expected to rise with the drop in the overall volume of checks, it is clear institutions that resist moving forward with remote capture and image exchange will miss the opportunity to make a positive impact to net income.

Deciding When to Go Electronic
EZ Deposit is a branch capture solution that provides members a tested, packaged branch capture product that works and is priced right. Since May, Southeast Corporate has been testing this branch capture hardware/software solution in a live credit union environment as part of a pilot with Florida Telco Credit Union in Jacksonville.

Southeast Corporate is preparing to analyze your deposits to determine if EZ Deposit will benefit your credit union. Most importantly, when you are ready to go electronic you can depend on Southeast Corporate's EZ Deposit branch capture solution to be a cost effective solution to accommodate Check 21 and make the transition as simple as possible for your credit union. If you would like information on Southeast Corporate's EZ Deposit, please visit




Sept. 13, 2004


  • Great article!
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