A substitute check or cheque, also called an image cash letter (ICL), clearing replacement document (CRD), or image replacement document (IRD), 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 “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)
- 37 files
The beginnings of substitute checks in the United States were formalized by the Check 21 Act which came into effect in 2004.
- ^“Clearing Replacement Documents Coming This October – Amendments to Rule A10”. Federal Financial Institutions Examination Council. n.d. Retrieved June 6, 2013.
- ^“Frequently Asked Questions: 10. What is the difference between an Image Replacement Document (IRD) and a substitute check?”. Federal Financial Institutions Examination Council. n.d. Retrieved May 2, 2011.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.