Substitute check explained

A substitute check or cheque, also called an image cash letter (ICL), clearing replacement document (CRD),^[1] or image replacement document (IRD),^[2] is a negotiable instrument 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) of an original paper check.

Standards and formats

Software providers have developed^[3] "Virtual Check 21" standards within electronic banking systems which allows creation and submission of demand draft documents to the bank of deposit.

Standards may include:

• Remotely created checks (RCC)
• X9.37 files

Geographical significance

United States

See main article: Substitute check in United States.

The beginnings of substitute checks in the United States were formalized by the Check 21 Act which came into effect in 2004.

See also

• Remote deposit
• Cheque truncation

References

1. Web site: Clearing Replacement Documents Coming This October – Amendments to Rule A10. n.d.. Federal Financial Institutions Examination Council. June 6, 2013.
2. Web site: Frequently Asked Questions: 10. What is the difference between an Image Replacement Document (IRD) and a substitute check?. n.d.. Federal Financial Institutions Examination Council. May 2, 2011.
3. Web site: Check 21 Processing | Check Verification | Check Scanning.

External links

• Understanding Laurentian Bank Cheque