Check21

Fortis Check21 meets the needs of A/R, finance and banking customers wishing to optimize their check processing that complies with the mandates set for Check21 by the Federal Reserve.

This solution offers not only the scan interface for scanning, endorsing and generating X9B TIFF documents, but it also integrates seamlessly with the Fortis line of products.

Check21 is a compliance mandate that allows for electronic check clearing. Consumers will no longer receive cleared paper checks back but rather have access to electronic images of checks.

Fortis Check21 is for any company that processes a high volume of checks. This solution is not limited to banks, thrifts and credit unions. Fortis Check21 has been successfully marketed towards utilities to handle customer monthly payments as well as local state and town municipalities to process excise/property tax payments. Fortis Check21 main benefit is to reduce float and allow companies to deposit quicker and get paid quicker.

Account receivable companies are looking to increase the speed of the payment to deposit process as well as increase cash flow and realize a greater return on investment.

Now thru one centralized interface all checks can be scanned, important metadata automatically captured thru CAR/LAR, quality checked and batch uploaded directly to your financial institution or Federal Reserve Bank in an approved x9.37-DTSU 2003 ICL (image cash letter) format.

The days of manual deposit separation and addition as well as hand written deposit slips is long gone. Transmit all deposits electronically through the Federal Reserves Check21 mandates.

The benefits of Check21 are clear - allows companies to enjoy later-than-paper deadlines which significantly improve availability. When you deposit an image cash letter of forward collection items, the Federal Reserve Banks will clear the items and present either substitute checks or an electronic file to the paying bank.

The Fortis Check21 solution is just that - a solution of best-of-breed products and services. The main process driver is Captovation's Check Capture 5.1 software bundle.

The end-to-end solution is completely automated once the check is scanned thru Captovation.

The Fortis Check21 solution provides:

• Built-in CAR/LAR support
  
  
• Built-in x9.37 ICL (image cash letter) module approved by the Federal Reserve
  
  
• Built-in confidence based QC module to accept check batch
  
  
• Built-in FTP/FTPS upload mechanism for batch transmit to banking institution
  
  
• Shared Branch Acquirer (SBA) Support
  
  
• Auto MICR parsing
  
  
• Batch total balancing
  
  
• Rapid key entry
  
  
• Unlimited number of manual defined data entry fields (i.e., payee, date)
  
  
• Import checks from your clearinghouse
  
  
• Back-end data validation (i.e., cross-reference scanned check account number with internal CRM/ERP data to auto populate)
  
  
• Support for Canon (CR-180, CR-55), Digital Check, Panini, as well as Kodak (i6060, i6090) scanners
  
  
• Fortis commit driver to automatically import ICL's or individual checks and associated check metadata into Fortis repository
  
  
• Support for check remittance matching

What are acceptable check items for Check 21?

All checks, except foreign checks, are eligible to become substitute checks, including the following:

• Consumer checks
  
  
• Business checks
  
  
• Corporate checks
  
  
• Government warrants
  
  
• U.S. Treasury checks
  
  
• Money orders
  
  
• Traveler’s checks
  
  
• Canadian checks, at present, Check21 cannot accurately parse as Canadian bank routing numbers are 8 digits and typically include a dash.

For example:
Branch Number (5 digits) + dash + Institution Number (3 digits).
Example: :12345-123:

In the future, the new X9.100-180 specification will allow for international (Canadian) checks to be included in an electronic cash letter.

How are NSF checks handled?
Regarding NSF checks, after the bank or credit union receives the file they will do some account reconciliation/review. Any checks they find that are from an existing account (account hasn’t been closed), and that account has the necessary funds to issue the check, the financial institution can issue the check electronically 1 more time.

Fortis Check21 can import a X9.37 file. So, after importing the file, the bank or credit union can delete any checks from the system that they find do not have funds to issue the check.

What is Check 21?
The Check 21 Act, which is also known as the Check Clearing for the 21st Century Act, was signed into law in October 2003 and went into effect in October 2004. It requires financial institutions to accept and be able to process Image Replacement Documents (IRDs). The law is intended to encourage the use of imaging technology to process and clear checks instead of moving and processing them manually.

What is an IRD?
IRDs are also known as substitute checks. An IRD is created from an X9.37 file, whereby the physical check is converted to a machine readable paper substitute. The IRD contains an image of the front and back of the original check and is MICR encoded.

An IRD must also bear a legend stating: “This is a legal copy of your check. You may use it the same way you would use the original check.”

What is X9.37?
X9.37 is an electronic file specification that was developed to support the Check 21 Act and is the industry standard for electronic check exchange defined by the American National Standards Institute and adopted by the Federal Reserve Bank. In Check Capture, a X9.37 file is created after a user has scanned and committed/archived their batch of checks. The X9.37 file, or ICL, is then uploaded to a paying institution where it will be cleared electronically or used to print Image Replacement Documents (IRDs).

(Note: X9.37 file output for Check Capture is sold as an option).

Does Check Capture create IRDs?
No. Check Capture is used to image checks and is not involved in the creation and printing of IRDs, which would only be necessary for institutions that can not accept an electronic image cash letter.

Has Fortis Check21 been certified by the Federal Reserve Bank (FRB) to be a Check 21-compliant system?
No. The FRB does not certify software or software vendors. Instead, financial institutions that want to establish an image exchange agreement with the FRB must go through a certification process. As part of the certification process, the financial institution will send the FRB a X9.37 test file derived from their check imaging system. The FRB will then report back to the financial institution as to whether or not they were able to process the file. If the FRB could process the file, then the financial institution is essentially on its way to using the FRB’s FedForward Image Cash Letter Deposit solution.

The same holds true for financial institutions that want to take advantage of the FRB’s FedReturn and FedReceipt (inclearings) solutions.

Does Fortis Check21 support direct exchange with the Federal Reserve?
Yes. Check Capture can output a X9.37 file that meets the Federal Reserve requirements. Then, the financial institution utilizes one of the recommended methods to transmit the X9.37 file to the Federal Reserve for processing. Captovation has tested Tumbleweed's secure transport software and determined that it does not require any direct support by Captovation Check Capture. The tumbleweed software is one of the transmission options offered by the Federal Reserve for financial institutions that clear directly with them.

Can Fortis Check21 integrate or co-exist with my core financial system?
Yes. Check Capture's architecture allows for integrations with virtually any system. After Check Capture users have finished imaging their checks, a batch commit is performed. During the commit process, Check Capture can create a standard X9.37 file that can be uploaded to most financial systems that support the X9.37 file format. In addition, Check Capture can also create a comma-delimited text file (for example) that would be used to update an accounting or banking system.

Check21 Case Study

Check21 Power Point