Definition of truncation

1. banking service in which cancelled checks or drafts are held by the customer's bank, or by another bank in the check collection sys-tem, and are not returned to the check writer with the account statement. Checks can be truncated, or stopped, at the bank where a check is first deposited, or by a Federal Reserve Bank. If done by a bank for its own customer, it is known as check safekeeping. The Check Clearing for the 21st Century Act (known informally as the Check 21 Law) allows replacement of actual checks with digital check images to improve the overall efficiency of the U.S. checkclearing system. The handling of actual checks is stopped, or truncated, at the depositing financial institution. With the new law, a bank on the West Coast can transmit an electronic check image to the East Coast, where a substitute check is created and presented to the paying bank; the check clearing process is thus shortened from days to hours. A substitute check is the legal equivalent of the original paper check and contains the phrase "This is a LEGAL COPY of your check. You can use it the same way you would use the original check."
2. dropping one or more digits in calculating interest accrued on savings accounts. For example, 1.677754 truncated after the fourth decimal becomes 1.6777. The opposite is rounding.

Banking: eliminating the service of returning canceled checks to customers.
Computers: dropping the digits of a number to the right of the decimal point. For example, the truncation of 6.45 is 6, and the truncation of 737.984 is 737; contrast rounding off.

the act of cutting off part of something; specifically:

1. dropping digits of a number that are to the right of the decimal point. For example, truncating 6.45 gives 6, and truncating 737.984 gives 737. In Pascal this operation is symbolized by trunc; in BASIC, by INT; in Java, by floor. Contrast rounding, which is finding the nearest whole number (such as 738 for 737.984).
2. cutting off part of an image or a printed word when not enough space is available to print it.

shortening of processing steps, in an effort to reduce paperwork and operating costs. For example, check truncation, or check safekeeping, where the bank holds the checks or microfilm records of them in a central file.