By Lisa Wines
While the use of electronic payment methods in the United States steadily increases, we still depend on paper checks more than any other industrialized nation in the world. Reliance on paper checks carries with it logistical and security limitations, which create a degree of exposure to fraud for all parties involved. As this exposure has become more apparent in recent years, Congress recently passed The Check Clearing for the 21st Century Act as a step toward a fully digital payment system. While the Uniform Commercial Code governs transactions involving paper checks, electronically converted checks and substitute checks are governed by the National Automated Check Clearinghouse Operating Rules and Regulation E. When State and Federal law conflict on a check-related issue, the Act preempts the inconsistent laws.
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