Remote deposit or mobile deposit is the ability of a bank customer to deposit a cheque into a bank account from a remote location, without having to physically deliver the cheque to the bank. This was originally accomplished by scanning a digital image of a cheque into a computer then transmitting that image to the bank, but is now accomplished with a smartphone. The practice became legal in the United States in 2004 when the Check Clearing for the 21st Century Act (Check 21 Act) took effect, though banks are not required to implement the system.
This service was originally used primarily by businesses with dedicated check scanners, but with the spread of smartphones and mobile banking it is now common in consumer banks.
Remote deposits became legal in the United States in 2004 when the Check Clearing for the 21st Century Act (or Check 21 Act) went into effect. The Act is intended in part to keep the country's financial services operational in the event of a catastrophe that could make rapid 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 in an account with one bank, the banks would have to physically exchange the paper check to the bank on which the check is drawn before the money would be credited to the account in the deposit bank. Under Check 21, the deposit bank can simply send an image of the check to the drawing bank. This reduction of the transportation time from total processing life cycle of a check provides a longer time for the corporation to process the checks, allowing for later deposits and faster check clearance. [1]
Initially remote deposit capture (RDC) was used primarily by businesses. Check scanners were priced between $250 and $2,500 and were either purchased by the business or rented from the bank. These businesses were also often required to pay monthly fees or maintain a minimum account balance to reduce the risk of fraud. Businesses were screened by the bank to determine the risk of fraudulent checks and bounced checks, and were audited by the bank to ensure proper check handling and disposal. [2]
On July 4, 2009, Element Federal Credit Union (formerly WV United FCU) [3] ) became the first financial institution to deploy a smartphone app for mobile check deposit. USAA closely followed launching a mobile application in collaboration with Mitek Systems in August 2009. [4] Several other banks began accepting mobile deposits in the early 2010s as the technology became more popular. [5] Mobile Deposit allows smart phone users to snap a picture of the check with the phone's camera. The application automatically processes the picture and sends it to the bank for deposit. The customer does not mail in the original check, instead voiding or discarding it. [6]
In 2013 the United Kingdom government proposed a similar digital cheque imaging law allowing mobile cheque deposit, which was put into place in 2014. [7] [8]
In 2020 Wells Fargo bank was ordered to pay $102.8 million in damages to USAA for infringing on mobile check deposit patents developed in 2008. [9]
Remote deposit use has grown. A June 2009 survey by group Independent Community Bankers of America found that 62% of banks in the United States offered merchant remote deposit, and 78% had plans to adopt the technology by 2011.
Client adoption of remote deposit capture was projected to reach 1 million by 2010, and over 5 million by 2012. [10]
According to an industry study conducted in late 2013, only 10% of U.S. banks and credit unions offered mobile deposit, though many more planned to do so. [11] Research by Celent in 2013 showed that 20 million customers used mobile check deposit in 2013, a growth from 10.9 million in 2012 and 2.2 million in 2011, beating previous estimates. [12]
By 2015 Celent estimated 87 million customers were using mobile check deposits, accelerating the decline of foot traffic to bank branches. [13]
The 2020 Coronavirus pandemic accelerated trends of shifting consumer behavior, further increasing use of mobile check deposits and reducing in person check deposits, contributing to branch closures. [14]
A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit.
A transaction account, also called a checking account, chequing account, current account, demand deposit account, or share draft account at credit unions, is a deposit account or bank account held at a bank or other financial institution. It is available to the account owner "on demand" and is available for frequent and immediate access by the account owner or to others as the account owner may direct. Access may be in a variety of ways, such as cash withdrawals, use of debit cards, cheques and electronic transfer. In economic terms, the funds held in a transaction account are regarded as liquid funds. In accounting terms, they are considered as cash.
Cheque clearing or bank clearance is the process of moving cash from the bank on which a cheque is drawn to the bank in which it was deposited, usually accompanied by the movement of the cheque to the paying bank, either in the traditional physical paper form or digitally under a cheque truncation system. This process is called the clearing cycle and normally results in a credit to the account at the bank of deposit, and an equivalent debit to the account at the bank on which it was drawn, with a corresponding adjustment of accounts of the banks themselves. If there are not enough funds in the account when the cheque arrived at the issuing bank, the cheque would be returned as a dishonoured cheque marked as non-sufficient funds.
The United Services Automobile Association (USAA) is an American financial services company providing insurance and banking products exclusively to members of the military, veterans, and their families. It was founded in 1922 in San Antonio, Texas, by a group of 25 U.S. Army officers as a mechanism for mutual self-insurance when they were unable to secure auto insurance because of the perception that they, as military officers, were a high-risk group.
The Check Clearing for the 21st Century Act is a United States federal law, Pub. L. 108–100 (text)(PDF), that was enacted on October 28, 2003 by the 108th U.S. Congress. The Check 21 Act took effect one year later on October 28, 2004. The law allows the recipient of a paper check to create a digital version of the original, a process known as check truncation, into an electronic format called a "substitute check", thereby eliminating the need for further handling of the physical document. In essence, the recipient bank no longer returns the paper check, but effectively e-mails an image of both sides of the check to the bank it is drawn upon.
Online banking, also known as internet banking, virtual banking, web banking or home banking, is a system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website or mobile app. Since the early 2000s this has become the most common way that customers access their bank accounts.
A cheque, or check, is a document that orders a bank to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The person writing the cheque, known as the drawer, has a transaction banking account where the money is held. The drawer writes various details including the monetary amount, date, and a payee on the cheque, and signs it, ordering their bank, known as the drawee, to pay the amount of money stated to the payee.
In economics, float is duplicate money present in the banking system during the time between a deposit being made in the recipient's account and the money being deducted from the sender's account. It can be used as investable asset, but makes up the smallest part of the money supply. Float affects the amount of currency available to trade and countries can manipulate the worth of their currency by restricting or expanding the amount of float available to trade.
Mobile banking is a service provided by a bank or other financial institution that allows its customers to conduct financial transactions remotely using a mobile device such as a smartphone or tablet. Unlike the related internet banking it uses software, usually called an app, provided by the financial institution for the purpose. Mobile banking is usually available on a 24-hour basis. Some financial institutions have restrictions on which accounts may be accessed through mobile banking, as well as a limit on the amount that can be transacted. Mobile banking is dependent on the availability of an internet or data connection to the mobile device.
Interac e-Transfer is a Canadian funds transfer service between personal and business accounts in participating Canadian banks and other financial institutions, offered through Interac Corporation.
A branch, banking center or financial center is a retail location where a bank, credit union, or other financial institution offers a wide array of face-to-face and automated services to its customers.
A direct bank is a bank that offers its services only via the Internet, mobile app, email, and other electronic means, often including telephone, online chat, and mobile check deposit. A direct bank has no branch network. It may offer access to an independent banking agent network and may also provide access via ATMs, and bank by mail. Direct banks eliminate the costs of maintaining a branch network while offering convenience to customers who prefer digital technology. Direct banks provide some but not all of the services offered by physical banks.
A substitute check is a negotiable instrument that is a digital reproduction of an original paper check. As a negotiable payment instrument in the United States, a substitute check maintains the status of a "legal check" in lieu of the original paper check, as authorized by the Check Clearing for the 21st Century Act. Instead of presenting the original paper checks, financial institutions and payment-processing centers transmit data from substitute checks electronically through the settlement process, through the United States Federal Reserve System, or by clearing the deposits on the basis of private agreements between member financial institutions. Financial institutions that process substitute checks in accordance with such private agreements are typically members of a clearinghouse that operates under the Uniform Commercial Code (UCC).
In banking, a lockbox is a service offered to organizations by commercial banks to simplify collection and processing of accounts receivable by having those organizations' customers' payments mailed directly to a location accessible by the bank.
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC, is a full-service bank with branches statewide. Founded in 1959, Nevada State Bank serves 20 communities across the state of Nevada. Zions Bancorporation, N.A. operates in nearly 500 local financial centers across 11 Western states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington and Wyoming. Zions Bancorporation, N.A. is included in the S&P 500 and NASDAQ Financial 100 indices.
The National Payments Corporation of India is an umbrella organization for operating retail payments and settlement systems in India, is an initiative of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India. It was created by RBI for operating retail payments and settlement systems in India.
Simple was an American neobank based in Portland, Oregon. It was recognized as the first neobank and operated between 2009 and 2021.
Mitek Systems, Inc is a software company that specializes in digital identity verification and mobile image processing using artificial intelligence. The company's software is used for depositing checks and opening bank accounts via mobile devices. It also verifies identity documents such as passports, ID cards, and driver's licenses by analyzing a selfie of an individual holding their ID, comparing their face to the photo on the document.
Chime Financial, Inc. is a San Francisco–based financial technology company that partners with regional banks to provide certain fee-free mobile banking services. The company offers early access to paychecks, negative account balances without overdraft fees, high-yield savings accounts, peer-to-peer payments, and an interest-free secured credit card. Chime earns the majority of its revenue from the collection of interchange fees on debit card transactions.