Check Truncation Definition

Check truncation is a special handling method for checks authorized by congress and used since late 2004. A physical check is written and accepted by the merchant, as usual. The physical check flows through normal processing only briefly, however, before it is "truncated". When a check is "truncated", both sides are digitally scanned and photo-reduced. The digital image of the check is then transmitted electronically and completes processing in a fraction of the time required for normal processing of a physical check. The physical check is not returned to the account holder. While check truncation benefits financial organizations immensely-it is fast and much less expensive than handling physical checks—is has no special benefit for consumers. Check truncation explains why it is possible to write a check at a grocery store and stop at the bank on the way home from the grocery store only to discover that the check has already cleared the bank.