Feb 14th, 2008
For a lot of people the idea of “never stepping foot in a bank again” would be a dream come true. Now it seems the banks are ready to cooperate with their latest innovation called, digital image check deposit. Digital image deposit allows business and consumer banking clients to deposit check from their home or office by simply scanning in an image of the check. Say good-bye to bank lines or even a trip to the ATM, your home is now your bank’s latest branch office!
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.
- You or your small business receives payment via check.
- You scan the check using the scanner attached to most standard printers.
- You log on to your bank’s secure online banking portal.
- Visit the remote deposit, or digital check deposit page.
- Fill in a few pieces of information about the check you are depositing: amount, date, routing numbers.
- Upload the image from your scanner by clicking a button and linking to it from your hard drive.
- Complete the process, once you see your image online.
- 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.