Image Cash Letters (ICLs) have become the preferred vehicle for transporting electronic check payment transactions between organizations and systems. Although standards were established for ICLs in the 1990s, it was the passing of Check 21 legislation that legitimized the use of substitute checks and image replacement documents. This opened the door for the use of a method to transport the electronic information instead of the original paper item.

No more worries about ACH termination

According to many, the main objective of Check 21 legislation was to remove all roadblocks for the implementation of an efficient check clearing system that would decrease check clearing float and improve the safety of the payment system. This was precipitated by the severe economic effects of the 9/11 terrorist attacks in 2001 that caused traffic gridlock, grounded air transportation, and prevented the timely clearing of $47 billion worth of check transactions.

Banks have realized that they can now offer deposit services outside their normal geographical boundaries. Offering remote deposit services has been driven by both demand and the desire of banks to grow and increase market share. Banks that have migrated to image processing for their check clearing operations also enjoy the benefits of reduced operational costs. Typical uses for ICLs are:

• Presentment of check deposits to the payee bank
• Clearing of check payments through exchange networks
• Remote deposit of check payments received by a corporation, retailer, government, charitable organization, or other merchant
• Delivery and clearing of return items
• Delivery of check transaction data deposited at international branches and foreign banks
• Formatting of check transaction data for printing of substitute checks, also known as Image Replacement Documents (IRDs)
• Delivery of check transaction data to corporations for reconciliation, authentication, and cash management purposes
• Transfer of check transaction data between the institution’s systems (high speed capture, remote deposit, ATM deposits, teller deposits, remittance, in-clearing, posting, signature verification, returns)