Recently, when my oldest son and I were out at an event, he took out a paycheck from some freelance blogging he had started doing (Ah, following in the family business! So proud!), and snapped a photo of it with his smart phone. It was his first such paycheck, and I thought he was preserving it for posterity.
He went on to explain that no, he was actually depositing it. He had an app from his bank that allowed him to snap a photo of it, and that would actually credit it to his checking account.
Yes, now your checks can have their own selfies. Great.
Mercifully, your checks can’t pose like this
The whole concept sounds a bit scary, quite honestly. And yet, it also sounds awesome. Think of it; no more rushing to the bank to deposit the check before closing time. No more fumbling with deposit envelopes and ATM cards at the drive-up ATM, while friendly drivers behind you encourage you with car horns and various exotic hand gestures. Let’s take a closer look at what could turn out to be one of online banking’s best benefits.
How Does This Work?
You need a smart phone, the mobile app from your bank, and the check, of course. You endorse the check, snap photos of both sides of the check, and voila, it’s in your account. The procedure is also called “remote deposit capture” or RDC.
And just like that, bank lines are a thing of the past. Just click and you’re done. But there are things you need to take into consideration, such as…
RDC is subject to many of the same limitations as depositing in person. The funds are not instantaneously available, for instance. As a rule, the first $200 of a deposited check should be available for use on the next business day. By the way, note that phrase: next business day. You can’t do an RDC on Saturday afternoon and expect to see any of that money until Monday at the earliest.
Anyways, that $200 deal was created before the Internet age. New technology means new rules are needed, and therefore banks have an out to drag their feet and hold onto those funds much longer. For instance, there’s virtual banks out there that can hold onto your money for up to ten days!
So far, banks that offer RDC don’t charge fees, with the exception of US Bank, which charges 50 cents per RDC. Considering how digital transactions are cheaper to process than in-person ones, this is baloney. Unfortunately, banks have never let a little thing like baloney prevent them from making a few more bucks. This is something to keep an eye out for.
And here you thought that simply checking your balance on your smart phone may be a little risky! Now we’re talking about actually depositing a real live check via that phone. If you’re using RDC, you need to put that paper check in a safe place and hold onto it for at least two weeks just in case there’s a problem. Once the check has indeed gone through free and clear and that two weeks has gone by, destroy the check completely so no one can use it to commit fraud.
Naturally, all of the cautions of using your smart phone in public in order to conduct private transactions apply here as well. Issues like password protections, hackers trying to skim your info, public Wi-Fi networks, all of this comes into play, and since we’re now talking about putting money in your account, the stakes are now higher.
RDC sounds like a terrific, convenient way of handling what can sometimes be an annoying chore. But caution and prudence should be exercised whenever you do a financial transaction on your mobile device, especially in this instance.