Beforeif someone deposited a check from one bank for example, PNC Bank into an account at a different bank for example, Bank of Americathe banks would have to physically exchange the paper check before the money would be credited to the account.
Legal and compliance risks could be significant depending on the effectiveness of controls and legal agreements that are in place. This section also presents the risk management practices financial institutions should implement in order to mitigate the risks described, and it concludes with specific controls appropriate to a number of retail payment instruments.
Recently, a number of new payment instruments have emerged that are largely or wholly electronic. Much of the guidance in this booklet, involving traditional retail payment systems, has not been revised significantly because of the maturity of these systems in the product life cycle.
But under Check 21, one bank can simply send an image of the check to the other bank. Remote Deposit Capture Remote Deposit Capture Remote Deposit Capture RDCthe digital processing of paper checks and monetary instruments at remote locations for deposit and clearing through the check image or ACH networks, has expanded rapidly in recent years and is being used at financial institutions and at customer locations.
This booklet references The introduction of remote deposit capture to blue banks security system services and brand names including those trademarked by their respective companies. With RDC, the depositary and collecting financial institutions may choose either to send or accept a substitute check or to engage in electronic check presentment ECP where data and images captured from the original checks are used to complete payment transactions.
Diagrams showing the typical payment flows and clearing and settlement arrangements for each of the retail payment instruments described are also included. Another potential benefit is that it cuts down on paperwork, and therefore reduces the chances of making mistakes or losing checks in the process of depositing them.
Bounced checks also show up faster when processed through remote deposit. The images, along with other verification information, are transmitted to the bank, where final validation occurs. Also, this booklet includes a new section that covers some emerging technologies in retail payment systems.
Implications for businesses and consumers[ edit ] A side effect of the Check 21 Act is that, because the digital image of a check is now considered a legal document, bank customers who get paid with a check can scan an image of the check and deposit it into their account from their home or office if their bank supports doing so.
These procedures address services and products of varied complexity; therefore, examiners should adjust the procedures, as appropriate, for the scope of the examination and the risk profile of the institution.
In some cases, financial institutions perform all of these tasks. The customer does not mail in the original check, instead voiding or discarding it.
However, the emergence of a new payment mechanism can also enable the rapid propagation of fraud, money laundering, and operational disruption if data is compromised. In addition to describing the IT risks and controls, the booklet also discusses certain credit and liquidity risks that may also be present when providing retail payment services.
Management of retail payments risk is increasingly difficult and requires diligent oversight of third-party service providers. The practical effect of the law is that checks can still be deposited and cleared, even if a disaster makes it impossible for banks to exchange the physical paper checks with each other.
USAA in became the first bank to permit customers to deposit checks with a smartphone. Several independent companies such as ProfitStars,  BankServDieboldRDM Corporation and NetDeposit claim to have signed up a few thousand customers, although several major banks have also developed their own systems and may eventually end up handling most remote deposit traffic.
Retail Payment Systems Overview-The first section of the booklet presents an overview of retail payment systems, grouping retail payment instruments in various categories, including: Mature payment systems are better understood, whereas emerging payment systems require a closer look to better understand the risks and associated controls.
Examination guidance for Retail Payment Systems is provided in three sections, followed by examination procedures, a glossary, and references: Examiners should use the examination procedures for evaluating the risks and risk management practices at financial institutions offering retail payment system products and services.
Additional emphasis is placed on the need for improved operational, credit, legal, and compliance risk processes for retail payment products, especially for the deployment of remote and Internet-based check and ACH capture systems.
Advocates of Check 21 claim that remote deposit saves time and money because businesses who use it no longer have to send an employee or a courier to take their checks to the bank. The procedures may be used independently or in combination with procedures from other IT Handbook booklets and agency-specific handbooks and guidance documents.
RDC is effectively replacing correspondent cash letter pouch activity. Financial institutions have a greater degree of control over RDC activities deployed at wholly owned or controlled locations. In addition, most banks offering Remote Deposit Capture have extended the cutoff times for deposit Although remote deposit-taking is not a new activity, RDC should be viewed as a new delivery system and not simply as a new service.
Financial institutions accept, collect, and process a variety of payment instruments and participate in clearing and settlement systems. RDC also may include the electronic capture of deposit information comprised of cash or other items such as electronic deposits made through a remote safekeeping arrangement at the customer location or through another intermediary.
A June survey by group Independent Community Bankers of America found that 62 percent of banks in the United States currently offered merchant remote deposit, and 78 percent have plans to adopt the technology by So far, all banks in the United States still operate with at least a one-day float period.
Retail Payment Systems Risk Management-The third section describes the risks associated with various retail payment systems and instruments, using the regulatory risk categories: Management should incorporate their assessments of RDC systems, including products and services, into existing risk assessment processes.Remote Deposit Remote Deposit Capture Services Overview Our Remote Deposit Services allow clients to make deposits anytime, anywhere.
No mailing, no driving, no hassle — now scan and upload your checks for deposit, instantly! Xpress Deposit Capture (XDC) Xpress Deposit Capture enables consumers and small businesses to deposit. Retail Payment Systems Overview-The first section of the booklet presents an overview of retail payment systems, grouping retail payment instruments in various categories, including: checks, card-based electronic payments, and other electronic payments, such as person-to-person (P2P), electronic benefits transfer (EBT), and ACH.
Risk Management of Remote Deposit Capture Background and Purpose Remote Deposit Capture (RDC), a deposit transaction delivery system, allows a financial Depending on the type of RDC system implemented, information security risks may.
Remote Deposit Capture (RDC), the digital processing of paper checks and monetary instruments at remote locations for deposit and clearing through the check (image) or ACH networks, has expanded rapidly in recent years and is being used at financial institutions and at customer locations.
The History of Remote Deposit Capture Remote deposit got its start in with the passage of the Check 21 Act, which gave scanned images of checks the same legal standing as the original paper documents.
Remote deposit is the ability in the United States and Canada to deposit a check into a bank account from a remote location, such as an office or home, without having to physically deliver the check to the bank.Download