SAN DIMAS, Calif. and WASHINGTON-WesCorp employed Webcasttechnology, facilitated through Counter Intelligence Associates, tospread the word about H.R. 1474, the Check Clearing for the 21stCentury Act, and educate credit unions on its benefits. Thelegislation creates a new negotiable instrument, the substitutecheck, which would carry equal weight with the original papercheck, according to Federal Reserve Assistant Director of theDivision of Reserve Bank Operations and Payment Systems Jack K.Walton II. This allows for greater efficiencies in the check systemby eliminating the handling of the original paper document from theprocess. With check truncation, the original check is capturedonce, instead of the eight to 12 times it is physically handlednow, which cuts out time and expense, he explained. Savings couldalso be realized by fewer physical locations for financialinstitutions that “won't necessarily need all the brick and mortarthey have today,” Walton said, as well as operational changes. Onebank told him that it could save between $70 and $90 per day perATM by imaging checks within the machine. “By establishing thesubstitute check and allowing for check truncation to happenearlier in the process, we can get checks cleared through thesystem at digital speeds rather than having to move [them]physically around the country,” Congressman Harold Ford's (D-Tenn.)Communications Director Seth Hanlon explained. Ford, a main sponsorof the bill, was unable to attend WesCorp's Webcast himself due toa plane delay. “There are a lot of innovations, in terms ofcustomer service that could occur,” Walton added. For example, withcustomers where the institution has high confidence levels, checkscould be imaged immediately and funds could be collected faster.Another plus is that few changes will have to be made to financialinstitutions' current systems, Walton added. He anticipates many ofthe financial institutions will embrace the new law quickly, onceits passed. Consumers will feel the impact of the legislation aswell. While they should have quicker access to funds, that alsomeans consumers who `play the float'-write a check knowing thefunds are not available but hope they will be available by the timethe check clears-will be in for a wake-up call, according toWesCorp Public Affairs Manager Sheri Ledbetter explained.Initially, she expects an uptick in bounced check fees, but thatshould level off, she said. Consumer protections are also includedto prevent “double debits” due to re-presenting of checks that havealready been presented, as well as expedited recrediting. The billis still shifting through the legislative process. It has hit onesnag regarding disclosure of the Fed's check transportation chargesthat is being worked out in the bill's conference committee. Oncethe House and Senate language are identical, both chambers vote onit and it goes to the president's desk for signing. WesCorp VicePresident of Item Processing Services Teresa Ward said that is notthe only problem. According to her, non-truncated accounts are ofconcern because, even though a digit can be used to identify theitem as returned to the consumer, they will need new checks. Thiscould be a problem if the consumer mistakenly uses their old checksor if the MICR line is misread by high-speed sorting equipment.Additionally, if the consumer changed their mind and decided to gowith truncation, they would need new checks all over again, Wardexplained. Other practical problems include image qualitystandards, which are not yet finalized, and security features ofpaper item, such as watermarks, do not typically survive imaging,she added. [email protected]

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