National Check Payments Certification

What Is A Check?

Copyright© 2015 by the Electronic Check Clearing House Organization

NCP 2016 Exam CycleSupplemental Materials: 1.3

2National Check Payments Certification

NOTICESThis training course may provide an introduction to or summary of various aspects of check payments and the legal and rules framework for check image exchange. Responsibility for compliance with image exchange rules, and/or the legal, operational and regulatory requirements applicable to check image exchange, remains at all times with the financial institution participating in check image exchange and/or the individual or company using a check image exchange service.

This presentation and the information contained herein is not intended as legal or compliance advice or recommendation to any person or company. This document could include technical inaccuracies or typographical errors and individual users are responsible for verifying any information found in this presentation and related “live” webinar or webinar playback. Financial institutions should consult with their legal counsel regarding legal and operational requirements applicable to any check image exchange program they may offer or in which they participate.

These materials may not be reproduced or published, in whole or in part, without the express permission of ECCHO.

Copyright© 2015 by the Electronic Check Clearing House Organization(Certain contributed content subject to third party copyrights)

What Is A Check?

4National Check Payments Certification

Payments Teaser

• Start with the images on next few slides–Can you tell which is a check?

–Is this paper check a check?

5National Check Payments Certification

Is This Large Check a Check?

• Hint: Assume this check has a MICR line

6National Check Payments Certification

Is This A Check?

• If this is a check, what type of check is this?

7National Check Payments Certification

Is This A Check?

• Hint: This “cloud” illustrates an image of a check. Is this a check

8National Check Payments Certification

Is This A Check?

• This is a MICR line from a check? –Is this a check?

9National Check Payments Certification

Is This A Check?• Hint: It is being sent directly from a mobile device?

2304North Pole, Inc.124 Elm StreetAnytown, ST 1111

DatePAYTO THEORDER OF

Your Bank4321 Ilala StreetAnytown, ST 1111FOR

2304 011500120 23456789

12/25/2012John Q. Customer

Four hundred thirty-seven and 23/100

$ 437.23

R. G. North

10National Check Payments Certification

Is This A Check?• Hint: This is created and sent from an online bill

pay/accounting software?

11National Check Payments Certification

Negotiable Instrument & Check

• Two Concepts – Two Definitions–Negotiable instrument and check defined UCC–Check considered a “demand draft”

• Check also defined in Reg CC–To be considered a check (not a noncash item), items

must qualify for handling by automated check processing equipment

• Examples shown: Negotiable instrument as a large “Donation” check, but...–Even with all elements of negotiable instrument, it

would not qualify for automated processing

12National Check Payments Certification

UCC 3: Negotiable Instrument

13National Check Payments Certification

Negotiable Instrument

• Draft as defined in UCC 3-104• Written order signed by the drawer

–Unconditional order to pay:a fixed sum of moneyon demand or at a definite timeto a named payee or to bearer

14National Check Payments Certification

Check – Negotiable Demand Draft

• Defined in Reg CC 229.2(k) as drawn on:–or payable through or at a bank; –the Federal Reserve Bank or Federal Home Loan

Bank;–the US Treasury;–a state or unit of local government;

• Includes:–a US Postal money order or traveler's check; –an original check and a substitute check

• Does not include a noncash item

15National Check Payments Certification

Noncash Item

• Would otherwise be a check except for special conditions

• Reg CC §229.2 Definitions: Noncash item – item that would otherwise be a check except that:–Passbook, certificate, or other document is attached;–Accompanied by special instructions, such as a request

for special advice of payment or dishonor;–Consists of more than a single thickness of paper,

except checks that may still qualify for handling by automated check processing equipment

– Item not been preprinted or post-encoded in magnetic ink with routing number of paying bank

16National Check Payments Certification

Additional Information

• For details on UCC and Reg CC provisions regarding terms defined in these materials, please see:–UCC Articles 3 & 4–Regulation CC – Availability of Funds and

Collection of Checks

Thank You!

Supplemental Materials: “What Is A Check?”

Electronic Check Clearing House Organization3710 Rawlins Street; Suite 1075

Dallas, Texas 75219

NOTICEThis NCPC Program document contains copyrighted materials of its publisher.

These program training materials may not be reproduced or published, in whole or in part, without the express permission of ECCHO.

Copyright© 2015 by the Electronic Check Clearing House Organization

Ellen Heffner, NCPDirector and Education Manager

eheffner@eccho.org214-273-3211