US Checks circulate around the world. Whether they are personal checks, company checks, money orders and traveller checks, checks drawn against US Banks are sent, taken and written in many countries around the world.
US Checks circulate around the world. Whether they are personal checks, company checks, money orders and traveller checks, checks drawn against US Banks are sent, taken and written in many countries around the world. Years ago, these checks were received by banks for deposit or cashed by foreign exchange firms but they had to be sent by mail or courier services back to the US for deposit.
Sometime in the 90s and the early years of this century US customs started stopping the envelopes containing the checks sent for deposit, even if they were fulfilling all the required documents and reports. This concerted effort of the US regulators to stop these checks in fear of being the source of money laundering and other suspicious activities and even if they were later released after legal recourses were used by the institutions involved, being time-sensitive materials, and after loses and hardships, the deposit & cashing of US checks became a service that few insitutions decided to continue offering.
On the other hand, very few banks were accepting third-party checks for deposit, worried about the US regulator’s view of these checks as being high risk.
But times have changed. Fintechs developed remote-capture systems for digitizing the paper checks, regulators came with new laws and requirements for AML controls that came into place, not after several institutions were fined for lack of good controls.
Remote deposit capture (RDC) is a technology-based method that lets electronic images of checks, instead of the original paper versions, to be transmitted from a financial institution to another, so banks can ultimately accept checks for deposit. Photographs or scanned images of the check’s front and back it is submitted electronically and the Check 21 legislation that became effective in the US in 2004 made remote deposit capture possible.
The check images used in remote deposit capture have to meet certain technical requirements to make sure they can be accepted as the “substitute” for the physical check. Not only being a minimum number of DPIs, dots per inch, it is necessary, but they can’t exceed a certain file size and being in a certain file format. There are some limitations. Some banks might not accept certain types of checks for deposit by remote deposit capture (traveler’s checks, money orders. third-party checks, etc).
Benefits for all
Remote deposit capture in the US is the technology that most banks have installed in their mobile banking where smartphones conveniently let’s the customer deposit checks. The process brings cost-savings for all parties involved: it eliminates trips to the bank for customers, checks can be deposited 24/7. Businesses use RDC to deposit checks they receive from customers, domestic check-cashers can use RDC to transmit the checks to the bank or check-processors, saving time and for international check-cashers cost and time savings are crucial allowing them serving customers quicker and as well as drastically reducing the cost.
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