by Lilly_Clemence

Created on: February 25, 2008

CHECK 21 AND REMOTE DEPOSIT CAPTURE

In the past few years, Remote Deposit Capture (RDC) has begun to revolutionize the way people do banking. In October 2003 the Check Clearing For the 21st Century' legislation, more commonly referred to as Check 21', was passed creating a stir of excitement in the banking community the likes of which had not been seen since the advent of online banking in the 1990s. In October 2004, Check 21 was implemented allowing banks to process images of checks and most significantly, without having to physically process the original paper checks.

Up until the implementation of Check 21, banks could only process the original paper check which had to be transported to the paying bank and await clearance, delaying processing and funds clearance, a process that could take up to several weeks to complete. With the advent of the Check 21 Act, banks could legally process ACH (Automated Clearing House) files and truncated IRD (image replacement documents) making it possible for check deposits to be scanned, cleared and funds transferred electronically within a matter of hours and without being restricted to the normal bank trading hours.

Most US banks have rushed to jump on board with Check 21 compliant technologies. More recently this new technology has also begun to be adopted by corporations and merchants allowing them to scan checks in-house, or through a service provider, and electronically send the image to a central bank for deposit without having to forward the original paperwork, thereby eliminating the requirement to physically send paper checks to their bank. The RDC revolution in check clearing effectively increases cash flow and reduces overheads for corporations and retail merchants, making it particularly appealing for industries such as real estate, healthcare and insurance where low volume, high dollar value deposits are common.

As with any great advance in technology, as the infrastructure for RDC becomes more refined and developed, the cost of related technologies decreases and access to that technology gradually filters down to the individual, such that today we stand at the edge of a new frontier in personal banking, where with the right technology, the homeowner could deposit checks into their bank account without leaving home. Where online banking brought your bank account information to your home computer, with RDC your home computer can now take your check deposits to the bank.

HOW REMOTE DEPOSIT CAPTURE WORKS

Essentially

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