Definitions for "Check Truncation"
Keywords:  truncated, drawee, writer, ucc, eft
1. Traditional definition: Deposited checks are held at the financial institution or Federal Reserve Bank of first deposit instead of being sent to the drawee financial institution. Information from the checks is transmitted electronically from the truncation financial institution to the drawee financial institution. 2. Additional definition: Checks tendered in payment at non-financial institution locations are held by the payee or by the maker (check writer), and the payment initiated by the check is made electronically.
A generic term used to describe the conversion of a paper check to an electronic payment or digitized image for clearing, posting and settlement. These transactions can be governed by paper check or EFT laws.
The conversion of a check to an electronic debit or image of the check by someone in the payment system other then the paying bank. The transaction may be governed by check law (UCC, Reg CC and Clearing house rules) or by electronic banking law (Electronic Fund Transfer Act).
The process of microfilming customers' paid checks or drafts in which the microfilm is the official record of the transaction. The official record is retained by the customer's institution and canceled checks and drafts are not returned to account holders. Customers may request copies of these checks at any time (fees may apply).
The process by which an original paper check is removed from the payment-processing stream, archived as an image and replaced by a substitute check. The original check is usually destroyed after a short time.