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Alternatives to sending image cash letter files

The Ops Stop provides your organization with a one-stop shop full of helpful operational resources offered by the Federal Reserve Banks. In this installment of the series, we are featuring the Paper Check Clearing Services, which are especially beneficial in contingency situations.

What can you do when neither you nor your vendor can send an image cash letter file? This type of contingency scenario is not uncommon, so it’s important to know your deposit options for both forward and return check items. The Federal Reserve Banks’ Paper Check Clearing Services allow financial institutions to deposit both paper forward and paper return check items. Please reference the bullets below for more information.

  • Forward Paper Check Clearing Services: Provide financial institutions with products that enable you to deposit forward checks for collection in paper form. The Federal Reserve Banks offer item processing, settlement and adjustments services to help manage your check clearing needs.
    • Mixed Cash Letters
      • You can deposit all forward items (commercial checks, Treasury Checks and Postal Money Orders) in a single cash letter for credit. Paper savings bonds must be deposited in a separate cash letter.
  • Return Paper Check Clearing Services: Enable you to return checks that are unpaid for a variety of reasons, including insufficient funds or a closed account. The Federal Reserve Banks send the returned checks to the bank of first deposit (BOFD), or to a correspondent bank or processor which has been designated by the BOFD.
    • Qualified Return Items
      • Preparing dishonored check items by qualifying them for automated processing can decrease your return item costs.
    • Unqualified Return Items
      • Dishonored check items that have not been prepared for automated processing will be qualified by the Federal Reserve Banks. This is a useful service if your institution does not have encoding equipment, your return items have attachments, or the BOFD cannot be identified.
    • Large Dollar Return Item Notification (LDRIN)
      • For all returned checks for $5,000 or more, current law requires you to notify the BOFD by 2 p.m. local time on the second banking day after the check is presented. To help your institution meet this requirement, the Federal Reserve Banks offer this service.

For more information about this service, visit the Paper Check Clearing Service setup page or contact your account executive.