IRD Explained

by Mary Beth Guard
Guru BIOS

Question: What is the difference between an "IRD" and a "substitute check"? Are the terms interchangeable?

Answer: Practically, but not quite. The term "IRD" is an acronym for Image Replacement Document. In almost every respect, it will look like and be like a substitute check, with one important difference. Beginning October 28, 2004, a substitute check will be considered a new type of negotiable instrument, required to be recognized under state and federal law as the equivalent of the original paper check. In order for a paper reproduction of an original check to qualify for substitute check status, one of the requirements is for it to bear the legend: "This is a LEGAL COPY of your check. You can use it the same way you would use the original check."

The original version appeared in the June 2004 edition of the Oklahoma Bankers Association Compliance Informer.

First published on BankersOnline.com