Making Digital Deposit Possible

In 2004 US legislation known as “Check 21″ made it unnecessary for banks to handle the physical checks in order to clear the financial transaction. These transactions could now be completed based on images of checks. The bill was passed in order to make the banking system, specifically around check clearing, much more efficient as the need to physically transport the checks between banks would be eliminated.

Companies like CheckFree have seized this new direction to begin extending image check processing to consumers and end users. The technology has been around for a while for large institutional banking clients, but is fairly new for small business and consumer checking.

How Remote Deposit Capture Works

It is an extremely simple process that requires only a standard computer, an Internet connection and a scanner. Most Inkjet printers sold these days include a scanner as part of their “all in one” models.

1. You or your small business receives payment via check.
2. You scan the check using the scanner attached to most standard printers.
3. You log on to your bank’s secure online banking portal.
4. Visit the remote deposit, or digital check deposit page.
5. Fill in a few pieces of information about the check you are depositing: amount, date, routing numbers.
6. Upload the image from your scanner by clicking a button and linking to it from your hard drive.
7. Complete the process, once you see your image online.
8. Your bank then completes the process electronically or in cases where the check is not compatible with electronic clearing systems, the check is reprinted onto paper and cleared the old fashioned way.

That’s about it. Depending on your bank and your personal relationship with them, you may see the funds in your account anywhere from instantaneously to a couple days (normal check cashing time frame).

Why Use Digital Deposit?

• Safety – not having to transport checks to the bank and risk lost or theft.
• Speed – banks should be able to process check transactions quicker when they come to the bank in electronic format.
• Time – it can save a lot of time being able to scan and deposit checks remotely and not have to actually visit the bank.
• Freedom – with so much of banking now done electronically, having to deposit checks in person or in an ATM was one of the last reasons to ever visit a bank.

What are the Potential Pitfalls?

• Security – of course there is potential for abuse and security breaches, but that is true of every aspect of banking and check image deposits shouldn’t produce any greater problem for banks than the rest of their day to day safeguards.

Digital image check deposit or remote deposit capture represents a major innovation in the banking industry and passes along a huge set of benefits to the consumer. Currently only about 20% of banks are offering this service, but recent surveys suggest that almost 90% of business clients (and probably almost as many personal clients) said they would use it when it comes available. If you deposit checks on a regular basis it is worth inquiring if your bank will let you deposit checks without coming into the bank, and if not letting them know that you would appreciate it being available.

the maturity of the principal industry in which the Harland Clarke segment operates and trends in the paper check industry, including a faster than anticipated decline in check usage due to increasing use of alternative payment methods and other factors

Taken from the CNN Money story on Harland Checks.

While there is an obvious movement towards electronic payments and away from paper based checks, there has also been an explosion in the styles and varieties of checks that are available. Combine this with the low prices and ease of ordering provided by ordering checks online and the business is still going strong.

Many checks companies, including giants like Wal*Mart are pushing more and more into this market, so it is my thought that the Harland Checks brand has become stale and that is more likely the cause of their loss of profit than the general personal paper based checks business decline.

Hudson said the fraud involved the changing of customers’ information on their own accounts with Wells Fargo.

“(Carmichael) and her accomplices were changing the customers’ phone numbers,” he said. “They would call customer service and say they had a new phone number. Then she would go to the bank and present a check made out to her.

“The bank would then call the new number, and the phony check writer would acknowledge writing the check and would authorize that it be cashed. On most of these checks, the amounts would be from $2,000 to $7,000.”

From a fraudulent checks story on sacbee.com

It’s a pretty simple scam although I would hope that banks would make you answer some type of security question before allowing you to change your phone number on your bank account.

This really is a security problem with the bank. I know mine always asks me my mother’s maiden name and my date of birth, but I guess even those are not that hard to find out for someone with a bit of work.

Our checks are taken cared of by professionals that handle millions of people’s financial statements everyday of the year, 24 hours a day. Checks are sorted via their account numbers, routing numbers, then tagged with micro ink.

A check then goes to the filing department where they are photocopied, analyzed for any corrections and any other issues a check would have that would mean it would need to be returned or further analyzed.

This entertaining video will show you how a day in the life of a check starts and ends. From the moment it’s shipped up to the moment they are sorted, tagged and sent to their respective banks for release.

It is a bit out of date, as these days much of this process has been automated, but it is still quite fascinating to see how much is involved in clearing each and every check that is written.

Click here to view the embedded video.

An overdraft is when you spend more than what your bank says you have available in your savings or checking account. Unwanted overdraws in your account are possible but can be avoided.

Many people do not know that with limited funds in your bank and not understanding bank policies, you can unexpectedly overdraw their accounts.

This video will show you how an overdraw in your account can happen, how to avoid it and give you a few tips on how to protect yourself from overdrawing your account.

Click here to view the embedded video.