Remote deposit refers to the ability to deposit checks into a bank account from one's home or office without having to physically deliver the actual check to the bank. This is typically accomplished by scanning a digital image of a check onto a computer, then transmitting that image to the bank--a practice that became legal in the United States in 2004 when the Check Clearing for the 21st Century Act (or Check 21 Act) took effect. This service is typically used by businesses, though a remote deposit application for consumers has been developed and has begun to be implemented by a handful of banks. It should not be confused with:
- Direct deposit, which refers to the practice of posting an employee's weekly earnings directly to his or her bank account.
- Online deposit, which refers to a retail banking service allowing an authorized customer to record a check via a web application and have it posted, then mail in the physical check, giving the customer access to the funds before the check clears in the usual way. While this type of service does not involve a scanner nor take advantage of the Check 21 Act, it is also sometimes called remote deposit.
Overview of the Check 21 Act
Intended in part to keep the country's financial industries operational in the event of a catastrophe that could make long-distance transportation impossible--like the September 11, 2001 attacks--the Check 21 Act makes the digital image of a check legally acceptable for payment purposes, just like a traditional paper check.
Before 2004, if someone deposited a check from one bank (for example, Wells Fargo) into his account at a different bank (for example, Bank of America), the banks would have to physically exchange the paper check before the money would be credited to his account. But under Check 21, one bank can simply send an image of the check to the other bank. The practical effect of the law is that checks can still be deposited and cleared, even if a disaster makes it impossible for banks to exchange the physical paper checks with each other.
Implications for businesses and consumers
A side effect of the Check 21 act is that, because the digital image of a check is now considered a legal document, bank customers who get paid with a check can scan an image of the check and deposit it into their account from their home or office if their bank supports doing so.
Advocates of Check 21 claim that remote deposit saves time and money because businesses who use it no longer have to send an employee or a courier to take their checks to the bank. Another potential benefit is that it cuts down on paperwork, and therefore reduces the chances of making mistakes or losing checks in the process of depositing them. Bounced checks also show up faster when processed through remote deposit.
Critics contend that remote deposit — and by extension, the entire Check 21 Act — is an attempt by the banking industry to eliminate "float," the standard one- or two-day waiting period between the time someone writes a check and the time the money is actually taken out of their account. Now that checks can be cashed and cleared electronically, it is theoretically possible for a bank to take the money out of your checking account on the same day you wrote the check. This would make checks behave much like debit cards--making it impossible, for example, to write a check to pay your bill at the grocery store, then rush to the bank to make a deposit so the check doesn't bounce. So far, all banks in the United States still operate with at least a one-day float period.
Usage of remote deposit
Usage of remote deposit is rapidly expanding: a June 2009 survey by group Independent Community Bankers of America found that 62 percent of banks in the United States currently offered merchant remote deposit, and 78 percent have plans to adopt the technology by 2011.
Adoption of remote deposit capture by clients is projected to reach the 1 million mark in the next two years, with its base expanding to over 5 million by 2012.
A few financial institutions that currently allow remote deposit using a typical scanner (as opposed to a MICR scanner):
The banking industry does not keep an official tally of how many businesses use remote deposit nationwide; however, the number is generally believed to be in the tens of thousands. Several independent companies such as Goldleaf Financial Solutions, BankServ, Diebold, RDM Corporation, Landmark Clearing and NetDeposit claim to have signed up a few thousand customers, although a number of major banks have also developed their own systems and may eventually wind up handling the lion's share of remote deposit traffic.
- ↑ FIS Introduces Consumer Remote Deposit Solution, Bank Systems & Technology, July 24, 2008. Accessed on July 27, 2008.
- ↑ BankFox - Deposit Checks Online With Your Scanner
- ↑ Celent's estimates were published on 4 June 2007.
- ↑ Remotely deposit checks from home or small business
- ↑ Deposits on command
- ↑ Secure remote deposit
- ↑ USAA Deposit@Home
It's possibly an error that Washington Mutual supports Remote Deposits. Their website has no mention of it. Further, remotedepositcapture.com, "The Independent Authority on Remote Deposit Capture", does not list Washington Mutual on their providers page (http://www.remotedepositcapture.com/vendors/vendors.banks.aspx)
- A Little Homework Could Have Saved Banks a Lot of Patents Grief
- Remote Deposit Capture Comes with Some Risks - A Short Description of Remote Deposit Capture
- Banks Will Face Competition in the RDC Space
- Wachovia Corporate Article on the Importance of RDC
- RDC Overview Overview of Remote Deposit Capture
- What is Remote Deposit Capture? - A summary of different points of capture.
- Full text of the Check-21 Act
- FDIC's list of frequently asked questions about Check-21 Act
- RemoteDepositCapture.com: The Independent Authority on Remote Deposit Capture
- Video of Remote Check Deposit in use at a small business (via YouTube)
- The Importance of Image Quality
- Extend the reach and success of remote deposit
- Cleaning Check Scanners to Insure Image Compliance
- Torrance Federal Credit Union - Remote Deposit Capture to Consumers