November 27, 2015

Goodbye, Check Float


Jim Blasingame of the Small Business Advocate points out that the check float that so many U.S. consumers (and small businesses) have relied upon will soon be gone. Go for that overdraft protection your bank offers, he says. You may need it by the end of October:

“…[T]he ‘Check Clearing for the 21st Century Act,’ or ‘Check 21,’ was passed, and will go into effect on October 28, 2004.

Although it was not the prime motivation for Check 21, it turns out that one of the by-products is the end of check float as we know it.

Practically speaking, when a customer presents a check for payment to a merchant with Check 21 capability, the amount tendered will be debited from the account at the point of sale, as with an electronic approval of a debit card. In fact, the merchant will likely just hand the check back to the customer after verification.

With Check 21, the days of shopping with checks first and making a deposit later are over.

So if a paper check is basically going to be treated as a debit card, it’s easy to see how this icon of our consumer society will join ‘float’ in the history books. Indeed, one expert predicted that with Check 21, the current movement away from paper checks and toward electronic money, ‘will shift into hyperspeed.”‘

Another goal of Check 21 is processing efficiency. Under the new law, banks won’t be required to return cancelled checks. This will mean significant savings for banks, but if you rely on returned checks for record keeping you’re going to need a new system.”

With no float time left, one of the last major advantages of writing paper checks in the retail environment will be gone. Of course, this shift from paper checks to electronic transactions has been taking place for years –driven by convenience — as this chart, showing in-store transactions in the U.S. illustrates (via

Electronic vs. Check Transactions Chart

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Anita Campbell - CEO

Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of

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