A substitute check is an image or a copy of an original paper check. Even if banks use electronic images of a check, the copy is a valid form of payment, and is just as good as the paper check itself. As a result, banks can pay funds from a checking account based on the image alone.
As a result of the Check 21 Law, banks process check payments faster than in the past. If you write a check, that may be bad news because the funds will be deducted from your account more quickly—or the check will bounce if you don’t have cash available, and you don't want that. When you receive a check, speed is a good thing because you get paid sooner.
Note
To be considered a substitute check under Check 21, the image must meet certain requirements. Among other things, it must clearly show the front and back of the check, and explain: "This is a legal copy of your check. You can use it the same way you would use the original check."
What's Not Substitute Check?
There is some confusion about what is and what is not a substitute check. A basic photocopy or image of a check is not a substitute check under Check 21. As a result, it cannot be used to move funds from one bank to another.
A “converted” check also does not qualify as a substitute check. Converted checks are paper checks that get converted into electronic payments by businesses you write checks to. That might happen when you hand your check to a cashier, and the cashier runs it through a check reader at the register. Converted check payments do not fall under Check 21 rules—they fall under electronic funds transfer rules, instead.
Who Uses Substitute Checks?
Banks use substitute checks to collect funds from other banks. Businesses and individuals you write checks to do not create substitute checks, and when you receive a check, you are not responsible for creating a substitute check. When a substitute check is created by your bank, your transaction is subject to the laws that govern traditional check activity—not electronic transactions. However, you have additional rights under Check 21 (see below).
That said, an individual or a business can indirectly create a substitute check or contribute an image that becomes part of an official document. If you pay somebody who uses a mobile device to deposit the check, the bank might convert the image into an official substitute check.
Note
For the most part, substitute checks work behind the scenes. Consumers and businesses typically won’t know or care if a substitute check exists.
Identifying Substitute Checks
How do you know if an image of a check is really a substitute check? Look for the wording "This is a legal copy of your check. You can use it the same way you would use the original check." The check image, along with all the accompanying information, becomes an Image Replacement Document (IRD). IRD is another term for substitute check.
If you have an IRD, you can use it to document payments you’ve made as if it was the actual check you used. For example, your bank statement might show payments you made during your statement cycle, and you see the substitute check (instead of receiving copies of your original checks). Those images can help you prove that you paid certain expenses, and should be just as good as an original, in most cases.
Problems Created by Substitute Checks
As with other electronic processes, substitute checks make things happen faster. That may be a good thing (by bringing fraud to your attention faster, for example) or a bad thing.
If you write checks before you have money in your account, you should expect checks to clear faster. You can’t take advantage of float time like you might have in the past, and you risk bouncing checks and paying overdraft fees. As things move faster, you need to be certain that you have funds available before paying by check. You can monitor your account by balancing your account or checking your available balance online regularly.
Note
If you have a habit of bouncing checks, evaluate some type of overdraft protection program—preferably one with minimal fees. Better yet, determine why you’re coming up short on payments and take action to avoid the problem in the future.
Errors and Fixes
Mistakes happen, so it’s critical to keep an eye on your account, open your mail, and set up alerts so you don’t miss anything. When it comes to substitute checks, the good news is that you have additional rights if there’s an error related to one of these payments.
If you properly dispute a transaction, the bank must investigate and credit your account promptly if they can't settle the issue within ten days.
For maximum protection, you need to review your statements regularly and notify the bank promptly of any errors. You only have 40 days after the substitute check is presented to you or appears on your statement to dispute the transaction.
FAQs
A substitute check is a special paper copy of the front and back of an original check. It may be slightly larger than the original check. Substitute checks are specially formatted so they can be processed as if they were original checks.
What is a substitute check in Check 21? ›
UNIQUE CHECK 21 CONCEPTS. A substitute check is a paper reproduction of the original check that: Contains an image of the front and back of the original check; Bears a MICR line containing all the information from the original check's MICR line, except as provided in ANS X9.
What are the key features of a substitute check? ›
A substitute check is a paper reproduction of an original paper check that must (1) contain an image of the front and back of the original check, (2) bear a Magnetic Ink Character Recognition (MICR) line containing all the information from the original check MICR line, except as provided in industry standards to ...
When would a bank use a substitute check? ›
Substitute checks are copies of an original check which are accepted as legally valid by banks. They were made legal in 2003 by the Check 21 Act, and they are now commonly used for check-clearing purposes. Banks can use photos or photocopies of an original check in order to make a substitute.
What is a substitute check and your rights? ›
The front of a substitute check states: "This is a legal copy of your check. You can use it the same way you would use the original check." You may use a substitute check as proof of payment just like the original check. Some or all of the checks that you receive back from us may be substitute checks.
What type of checks are eligible to be converted to substitute checks? ›
Generally, any check can be used to create a substitute check, except a foreign check. Banks and their customers must accept a substitute check as if it were the original check because the substitute check is legally the same as the original check.
Can I mobile deposit a substitute check? ›
A substitute check is an image or a copy of an original paper check. 1 Even if banks use electronic images of a check, the copy is a valid form of payment, and is just as good as the paper check itself. As a result, banks can pay funds from a checking account based on the image alone.
What is a negotiable substitute check? ›
What is a Substitute Check? A Substitute Check is a digital reproduction of an original paper check. In the U.S. the Substitute Check is a negotiable payment instrument and is considered to be legal check in lieu of the paper check.
What is considered a temporary check? ›
Counter checks, also called temporary or starter checks, are a set of plain, printed checks from your bank that include your account information and the bank's routing number. They can be used like personal checks.
Why would a bank issue a substitute check? ›
You may receive substitute checks in other limited circ*mstances. For example, your bank may give you a substitute check if you ask to have a particular canceled check back to prove a payment. Also, your bank might provide a substitute check to you when returning a “bounced” check that you deposited into your account.
To make check processing faster, federal law permits banks to replace original checks with “substitute checks.” These checks are similar in size to original checks with a slightly reduced image of the front and back of the original check. The front of a substitute check states: “This is a legal copy of your check.
Can institutions refuse to accept a substitute check? ›
No financial institution can refuse to pay a Substitute Check in place of the original share draft from your processor, Alloya Corporate, SCIP or others; you must accept the Substitute Check.
Can a substitute check be used as proof of payment? ›
The front of a substitute check states: “This is a legal copy of your check. You can use it the same way you would use the original check.” You may use a substitute check as proof of payment just like the original check.
What are the three types of checks? ›
Types of checks include certified checks, cashier's checks, and payroll checks, also called paychecks.
Who cashes substitute checks? ›
Provided that the copy includes both the front and the back of the original check, banks are free to use substitute checks when obtaining payments, significantly expediting the check clearing process.
Can a substitute check bounce? ›
If a substitute check must be returned unpaid because of insufficient funds (a dishonored or bounced check), the paying bank (Bank 2) stamps the item NSF (non-sufficient funds) as the reason for the return.
What checks are not eligible for mobile deposit? ›
The following are not eligible for Mobile Deposit: international checks, U.S. savings bonds, U.S. postal money orders, remotely created checks (whether in paper form or electronically created), convenience checks (checks drawn against a line of credit), non-American Express traveler's checks, cash, checks that are ...
How much can I cash a check for without being flagged? ›
Depositing a big amount of cash that is $10,000 or more means your bank or credit union will report it to the federal government. The $10,000 threshold was created as part of the Bank Secrecy Act, passed by Congress in 1970, and adjusted with the Patriot Act in 2002.
Can you keep a check without cashing it? ›
Personal, business, and payroll checks are good for 6 months (180 days). Some businesses have “void after 90 days” pre-printed on their checks. Most banks will honor those checks for up to 180 days and the pre-printed language is meant to encourage people to deposit or cash a check sooner than later.
Can I cash a check that isn't mine? ›
Banks will allow you to cash or deposit a personal check for someone else. This is especially useful for people without a bank account, as it means a friend or family member can cash in a personal check for you.
Fraudulent checks can pose a significant threat to banks and financial institutions. If they're cashed unknowingly, the institution could be held responsible for the funds. It's important for financial institutions to proactively verify all checks. These steps deter fraud and detect it before it becomes an issue.
What is a check that a bank refuses to pay? ›
Dishonored check – a check that a bank refuses to pay.
Why would a check be unacceptable? ›
A bad check is a check the bank will not honor. There are three kinds of bad checks. Non-Sufficient Funds (NSF) checks: A check is NSF if there is not enough money in the account to pay it or the account is closed. Stop Payment checks: The person who wrote the check told the bank to stop payment.
Can I use a piece of paper as a check? ›
Printing a check on plain paper is not recommended. Instead, you'll need check stock paper. Specifically designed for printed checks, check stock paper includes additional features such as microprinting, security warnings, and watermarks.
What is a document that looks similar to a check? ›
A bank draft is a payment instrument that carries a guarantee of funds from your financial institution. It's a paper document that looks a lot like a regular cheque.
Can you use any piece of paper as a check? ›
As long as it has the elements, the surface doesn't make a difference. A check is an order to pay someone, that's all it is.
Is a substitute check a bounced check? ›
If a substitute check must be returned unpaid because of insufficient funds (a dishonored or bounced check), the paying bank (Bank 2) stamps the item NSF (non-sufficient funds) as the reason for the return.
Can I write a check on a piece of toilet paper? ›
It is legal to write a cheque on anything so long as it contains all the relevant details.
Can you write your own check? ›
Can you legally write a check to yourself? Yes, it is legal to write a check to yourself, as long as you're not writing the check for more money than you have in the bank. It would be illegal to write a check for more funds than you have and then try to cash it.
Will a bank accept a check printed on regular paper? ›
No, you do not need special paper. Even though the check is printed on regular paper, your bank is still able to capture an image of the check and send it to the automated clearing house to request funds from the issuing account.
Both cashier's checks and certified checks are official checks that are guaranteed by a bank. Compared to personal checks, cashier's checks and certified checks are generally viewed as more secure and less susceptible to fraud.
What is considered a printed check? ›
The checks that your bank prints and mails to you can be considered pre-printed checks. Usually, the bank charges a fee for printing and mailing checks to you, which is why you should decide on the check stock option and proceed with printing your own checks.
Can I deposit a check if someone sends me a picture of it? ›
Most major banks also offer an app that allows you to instantly deposit scanned checks by taking a picture of them. You can use this app to deposit your printed check or the digital version. Some services allow you to instantly deposit emailed checks by entering your banking information into a secure online form.
Can you put liquid paper on checks? ›
Know when you cannot use correction fluid or correction tape
These include passport applications and other legal documents that require signatures, like checks. Because it could be perceived as tampering in those cases, correction fluid or correction tape typically can't be used to correct errors.
