Important Check 21 Terms To Know

Account – Means a deposit account at a bank.

Check Conversion – The process by which essential information contained on a conventional paper check is captured electronically (data and image) at the first point in the clearing process; essential information, consists of the routing & transit number, customer account number, check serial number, and the dollar amount of the check.  The electronic data, not the paper check, is then sent through the clearing system.

Business Day - The term ''business day'' means any day other than a Saturday, Sunday, or legal holiday. 

Check – Means a draft, payable on demand and drawn on or payable through or at an office of a bank, whether or not negotiable, that is handled for forward collection or return, including a substitute check and a travelers check; and (b) does not include a noncash item or an item payable in a medium other than United States dollars.

Forward Collection – Means the transfer by a bank of a check to a collecting bank for settlement or the paying bank for payment.

MICR Line – Magnetic ink character recognition line means the numbers, which may include the bank routing number, account number, check number, check amount, and other information, that are printed near the bottom of a check in magnetic ink in accordance with generally applicable industry standards.

Noncash Item - The term ''noncash item'' means - (a) a check or other demand item to which a passbook, certificate, or other document is attached; (b) a check or other demand item which is accompanied by special instructions, such as a request for special advise of payment or dishonor; or (c) any similar item which is otherwise classified as a noncash item in regulations of the Board.

Substitute Check – Means a paper reproduction of the original check that – (a) contains an image of the front and back of the original check; (b) bears a MICR line containing all of the information appearing on the MICR line of the original check, except as provided under generally applicable industry standards for substitute checks to facilitate the processing of substitute checks; (c) conforms, in paper stock, dimension, and otherwise, with generally applicable industry standards for substitute checks; and (d) is suitable for automated processing in the same manner as the original check.

Truncate – Means to remove an original paper check from the check collection or return process and send to a recipient, in lieu of such original paper check, a substitute check or, by agreement, information relating to the original check (including data taken from the MICR line of the original check or an electronic image of the original check), whether with or without subsequent delivery of the original paper check.