Remote Deposit and Your Small Business
Thanks to a law passed in 2004 called Check 21, it's perfectly legal for financial institutions and businesses to use digital images of paper checks as substitutes.
The basic ideas was to keep banks and credit unions in the U.S. operational in the event of a national catastrophe such as a terror attack or major natural disaster.
Remote deposit capture, or RDC is the process of depositing checks into a bank account without the need to actually bring the paper check to a bank.
It's fairly obvious how Check 21 and remote deposit can help banks and credit unions. But there are also quite a few benefits for small businesses like yours - and now individuals can also take advantage.
How Remote Deposit Capture Works:
Remote deposit makes it easy for your small business to deposit multiple checks without ever leaving your office or home. In most cases, you would scan the check to create a digital image.
Some banks may require you use a specific type of equipment called a MICR scanner. This type of scanner has the ability to read the magnetic ink used to print routing and account numbers on business and personal checks. But the number of financial institutions that allow companies to use a normal scanner is growing.
One of the best things about RDC is that your business won't have to send an employee on a trip to the bank to deposit checks. That can save time and money. This also decreases the likelihood of checks becoming lost, and it eliminates piles or paperwork. There is a much smaller chance for human error on your part and the bank's when you use RDC.
Still Catching On
A study conducted in June of 2009 by the Independent Community Bankers of America revealed that 62 percent of U.S. financial institutions currently offer RDC to most small businesses. 78 percent of financial institutions that were not offering the technology planned to do so by the year 2011. Estimations show the number of clients using RDC to process checks will be more than 5 million in just a couple of years.
Yet it's easy to see how there is plenty of room for growth. Celent, a consulting agency for financial institutions indicated in an August 2009 study that the majority of banks admitted the fact that less than 5% of their small business customers were actually using remote deposit capture.
There are also non-bank providers of RDC services. In 2010, Heartland Payment Services and Servant PC Resources introduced special remote deposit software specifically designed for churches. Obviously, churches have to deal with a large number of personal checks all the time. The software offered additional benefits that gave extra value to remote deposit.
Notifications are sent to clients allowing them to keep an eye on every part of the check clearing process. Clients can also choose to have Heartland's automated recovery program handle bad checks. This program also examines deposits in search of scanned checks of low quality and adjusts accordingly. That eliminates much of the need for correcting checks manually.
Financial experts believe that if more banks adopted policies like this, the number of RDC clients would grow much faster, even if business customers were charged a fee for the services.
Remote Deposit for Consumers
The convenience of remote deposit is now becoming available to consumers as well. A handful of banks, like Texas base USAA Bank, now allow their customers to use remote scanners in their homes for depositing checks.
Chase Bank recently released an iPhone application for mobile banking that also allows users to make remote deposits.
All you need to do is snap a photo of the back and front of your checks, enter the amount and send it to your branch. That means people don't have to drive to the bank during the day to deposit personal checks - you can do it from your home office when you have the time.
It is likely that more banks, businesses and individuals will see the many benefits of remote deposit ensuring that personal and business checks will remain an efficient payment option.
Call your financial institution today and find out of remote deposit capture services are available for your small business.
About the Author
Kasey Steinbrinck has written in the television radio and newspaper industries. He now creates web content for Check Advantage, which offers personal checks and business checks directly to consumers. Visit http://www.checkadvantage.com/all-checks.html today.
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