Remote Deposit Capture (RDC) was created to enable merchants and businesses to deposit funds into an account by transferring check deposit information electronically. Most major banks offer remote deposit capture to both large and small commercial clients. In 2010, JP Morgan Chase began offering remote deposit to individuals through an application for the iPhone.
History
The electronic transfer of funds began in 1967 with the invention of the first automated teller machine (ATM). In 1974, the Electronic Payments Association was formed by automated clearinghouse groups based in California, Georgia, New England and the Midwest. In 1985, the Supreme Court ruled that electronic funds transfers were permissible across state lines. In 2003, the Check 21 Act enabled banks to turn checks into electronic form, and by 2007, many financial institutions were offering remote deposit capture.
Features
Financial services companies provide single and batch scanners that transmit data from physical checks directly into bank accounts. Scanners read both preprinted and handwritten checks and transmit images of both front and back simultaneously. RDC terminals cannot transmit cash deposit information, but can process all forms of checks and money orders. Banks base pricing for the service upon creditworthiness, deposit volume and the overall relationship of the client with the bank.
Benefits
RDC means that merchants no longer have to bank at local financial institutions. Businesses can reduce or eliminate trips to the bank, which saves both time and money. RDC also eliminates the need to secure checks prior to and during banking hours. Most banks allow clients to transmit checks until 9 p.m. local time and have same-day access to deposited items. RDC scanners enable businesses to make deposits 24 hours a day and seven days a week.
Considerations
Transfers of checks using RDC are covered by Federal Reserve Regulation CC. Banks assume risks by giving immediate availability on remotely deposited items, and try to mitigate those risks by requiring RDC customers to meet stringent underwriting standards. Banks examine cash-flows, credit scores and tax returns of entities before approving them for the service. Some RDC systems process checks as automated clearinghouse items that fall under Regulation E and expose the banks to different levels of liability from those involving items clearing as checks.
Warning
Banks market the cost savings that businesses enjoy by eliminating bank visits and mail-in deposits, but RDC services are not free. Banks sell or rent terminals to clients with batch scanners costing $500 or more. Most banks assess monthly service fees to clients who do not meet minimum deposit volume requirements. Banks also utilize risk management strategies to prevent businesses from depositing large checks that exceed their deposit averages. Some deposits, including cash, foreign checks and high-dollar checks, still necessitate visits to the bank.
Tags: remote deposit, automated clearinghouse, batch scanners, Deposit Capture, deposit capture, deposit information, deposit volume
