Buying Guide: Remote Deposit

Remote deposit is the concept of depositing checks into a person’s or organization’s bank account. The key feature of this process is that a person does not need to go the bank to deposit the check. The check can be deposited from home or work with help from remote depositing services. This process is generally accomplished by making use of scanners, eradicating the need to submit the check to the bank. The scanned image will be presented to the bank, which will then be transferred to a computer completing the deposit.

 

Remote deposit services are legal and commonplace in most states. Businesses with lots of transactions, in which employees have little time to visit banks, make best use of this kind of service. Remote deposit should not be confused with ‘direct post deposit’ which includes mailing of physical checks, or ‘online deposits’ which is done through the Internet. 

 

The Check 21 Act of 2003 made all of this possible. The act considers the digital image of the check to be legal, similar to traditional paper check. This was done to help financial institutions in relatively hard-to-reach areas, making it easy for banks to transfer funds by sending digital image of checks. The number of businesses and individuals using remote deposit service has increased and is still rapidly growing. According to a survey in June 2009, 62 percent of US financial institutions offer remote deposit services to the customers.   

 

 

Which companies are the major providers of remote deposit services? Are their services different for small businesses?

 

Many financial institutions leaped into this business not long after it became legal. Most prominent banks such as Bank of America and HSBC offer remote deposit services. Some private companies also offer specialized remote deposit services, however, most of the time, this service is bundled into a package with other service offerings from your bank. 

 

 

This poses other questions: What kind of companies can best take advantage of this service? What kind of equipment do I need for Check 21 services? What kind of security?

 

Remote deposit services work well for most companies, but those with large transaction volumes, geographically isolated work places and a greater dependence on a short cash cycle can make best use of the service. 

 

It is important to make sure that the scanned images bear every minuscule detail of the original check. There’s a chance of your check getting rejected if any discrepancy between the check and the image is noticed at the bank. That means you need a pretty good scanner to make this work.

 

You should have an Internet connection which will enable you to transfer the image of the check to the bank and get it deposited. Needless to say, if you’re using your computer for financial services transactions, you need serious anti-virus and security software. But that’s about it.

 

 

Remote deposit services are one of the most expedient ways of depositing your check in your bank account. But, it’s new, so folks can be skeptical. As with most business questions, this comes down to cost. What does it cost you to drive your checks out to your bank a couple of times a week, in lost productivity and the delayed cash flow from those checks? That’s what it’s worth to pay for a service like this, as a starting point. Still, the cost of a high-quality check scanner can be expensive. But many providers will offer the equipment as a lease – or gratis – to get your business. Hence, opting for the service through a professional company, to do the deposit for you is beneficial.