s Oct. 28, 2004 approached, you probably heard a mention or two in the mainstream media of the impending chaos that would be unleashed on the unsuspecting public when Check 21 took effect.

It's not too often that information on issues within the financial services industry appears in print or on the air for dissemination by general audiences.

Big stories in our industry, such as the settlement in the class action suit brought by Wal-Mart and thousands of merchants against Visa U.S.A. and MasterCard International, or when the U.S. Supreme Court declined in early October to consider an appeal by Visa and MasterCard regarding their member banks issuing American Express or Discover cards, barely get a mention in the mainstream press most of the time.

The Check 21 story seemed to be perceived differently, however. Many TV news broadcasts and print and electronic articles reported on the Check Clearing for the 21st Century Act, or Check 21. While it's been thoroughly discussed throughout our industry (and in the pages of The Green Sheet), the potential effect on consumer check writing was important enough for more widespread coverage.

What was especially interesting was the slant these non-industry-related news organizations gave the legislation. Invariably, the reporting led with the hook that Check 21 will make it easier to bounce checks.

Consumer advocates warned that bank customers will no longer be able to rely on "float," the comfortable safety zone check writers have come to depend on between the time a check is accepted to when the money comes out of their account. Instead of taking three to five days to clear, some checks will now clear in one day or less thanks to Check 21.

By some accounts, this will result in 7 million more bounced checks every month, triggering $170 million more in bounced check fees.

Check 21 is intended to simplify an outdated and cumbersome process. Check 21 does not mandate that paper checks be converted to electronic images; the law now makes it possible for banks to use that method if they choose.

Every day, Americans write an estimated 101 million checks (or between 36 - 40 billion a year). During processing, eight different people handle each check; every day it takes 192 flights to transport 163 tons of paper checks around the country.

Currently, only 25% of all checks are handled electronically, according to a report on CBS MarketWatch.com, but over 50% of financial services companies expect to switch to electronic imaging in the near future.

It's not just consumers who will be affected by the implementation of Check 21, according to some industry analysts. For many companies, especially those that specialize in the solutions that make the process possible, including image archiving, it could prove to be lucrative.

The CBS MarketWatch report cited as examples a few companies to which banks outsource for the migration to the modernized system. Fiserv processes checks for 1,700 financial institutions across the U.S.; its stock value increased by 2% the day before Check 21 took effect. Bisys, a company worth $1.7 billion that provides back-office solutions for banks, saw its stock value go up by 3% on the same day. First Data Corp. was also mentioned.

Some recent industry acquisitions could prove to be very wise moves. Bank of America's acquisition of National Processing Co. for $1.4 billion, perhaps happened in part to offset the impact of Check 21.

Marshall & Ilsley's (M&I) Metavante subsidiary acquired VectorSGI, a privately held provider of image processing solutions; M&I's stock price rose $0.37 per share.

Large banks including Citigroup and J.P. Morgan Chase & Co., will save on the cost of processing paper checks but will lose the float cash. These banks base loans and other activities on their float reserves, which generate big earnings.

Financial institutions currently spend about $8 billion a year handling and processing paper checks; changes to the system from Check 21 could save $2 billion annually.