Consumers Don't Have a Clear Image of Check 21 Law and Its Impact
An online consumer poll conducted by Harris Interactive® for NCR Corporation (NYSE:NCR) confirmed what many financial industry insiders already know: Most consumers are completely unaware of the Check Clearing for the 21st Century Act (Check 21), and its potential impact on their current banking practices.
Grounded planes on 9/11 halted check processing throughout the United States, costing the industry billions and accelerating the need for a dramatic change in the check processing system. The resulting law takes effect October 28, 2004. According to the poll, conducted in May, 2004, 95 percent of checking account holders are unaware of this legislative action.
The new Check 21 law allows for a substitute check (based on a digital image of the original check) to be accepted as legal in the check processing system. It opens the door for imaged-based processing and exchange, essentially removing paper checks from the processing system over time.
According to a 2003 Global Concepts report, about 41 percent of U.S. banking customers currently receive cancelled paper checks in the mail. The image-based processing environment offers banks the opportunity to stop this practice altogether. Instead, customers may receive imaged copies of their cancelled checks, a statement including a picture of their checks or online access to check images.
In addition, the adoption of this new legislation means some banks may allow faster posting of checks deposited to a customer's account. Eighty-nine percent of the poll respondents liked the idea of faster deposit posting. This acceleration of funds availability means consumers may find their funds clear within hours instead of days. Some consumers will need to adjust their check writing habits, however, if they write checks before their deposits are actually posted.
Today's lack of awareness among consumers does not necessarily mean consumers won't readily adapt to the change. In fact, 87 percent of the online poll respondents rated online access to their cancelled checks as convenient. Seventy-nine percent rated receiving image-based statements as convenient. Both of these were rated higher than receiving cancelled checks in the mail (65 percent).
Keith Taylor, senior vice president of NCR's Financial Solutions Division, said, "Many consumers like the idea of being able to search and find their own records on their own time. This data is encouraging for banks that may be concerned about customer acceptance of the changes. NCR provides banks the technology and services needed to manage the customer transition to this new way of doing business."