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CrossCheck Blog

Check Processing & Payments Information

Remote Deposit Capture Saves Money and Increases Cash Flow

Posted by Kris Coughtry | Fri, Mar 02, 2012 @ 07:16 AM

Paper check processing has been on the road to "electronification" for over twenty years. Even with the introduction of debit cards and check cards, more than 20 billion checks are written each year according to the Federal Reserve Payments Study. As the cost of transportation and labor continues to increase, attempts to provide alternatives to physically depositing a check at one bank to be cleared at another bank, sometimes thousands of miles away, has become a motivating factor to streamlining the process. Add to that, businesses looking to improve operational efficiencies, and retail companies with multiple locations in need of consolidating banking, and the need for a system such as Remote Deposit Capture (RDC) is evident.

iStock-929215776Electronic check processing and conversion solutions were introduced in the late 1980s and 1990s and had some success, especially for A/R or checks mailed in for payments. Check conversion services for point-of-sale purchases had some stumbling blocks and were slower to be accepted by retailers who were often confused by the technology, did not have the necessary equipment to effectively image the checks or a clear understanding of the process in order to inform their customers.

On October 28, 2004, the Check Clearing for the 21st Century Act took effect and helped move RDC forward. This Act, also known as the Check 21 Act, mandated that banks and institutions create a negotiable instrument called a "substitute check." A substitute check is the legal equivalent of an original check and contains an image of the front and back of a check, allowing it to be processed as a paper check. Rather than requiring the physical check, the substitute check can be cleared and settled electronically. This eliminates the need for a bank to transport checks to other banks and financial institutions across town or across the country for clearing. Checks that qualify for RDC include both consumer and business checks.

CrossCheck recently published a Remote Deposit Capture white paper that outlines:

  • The Benefits of RDC
  • RDC service enhancements including check guarantee
  • A checklist to identify areas of cost savings
  • A look at the future of RDC

For more information, download the full white paper today.

remote deposit capture

Topics: Increase Sales, Remote Deposit Capture (RDC)

Written by Kris Coughtry