Remote deposit capture (RDC) is a treasury management tool and fully electronic method of banking that converts paper checks into digital images using a check scanner. Once the images are scanned, they are compiled into a batch and deposited to your business checking account. This service is offered by both traditional and online-only banks, saving clients from making physical trips to the bank or ATM for deposits. This banking feature allows your business a convenient, secure, and easy way to make deposits.
How Remote Deposit Capture Works
Depositing a check through RDC is a quick and easy process. Here are the steps in order when using this service:
Step 1: Collect all checks you would like to deposit.
Step 2: Endorse all checks on the back as if you were taking them to the bank.
Step 3: Total the checks up by adding them together or taking the internal accounting spreadsheet for that batch and noting the total for later balancing.
Step 4: Face all checks so the face is to the right and the back of the check is to the left.
Step 5: Turn the checks on the right end and tap them on a hard surface to ensure all ends are even so they will catch under the scanner rollers. (When checks are different shapes and sizes this helps prevent check piggybacking).
Step 6: Scan all checks in the batch. If any kick out, check them to see what the cause could be. If the check is not fraudulent, it can be kicked out if it has been wet and the ink has smeared or if it’s torn.
Step 7: Check your computer screen in the treasury management software for errors. Any empty fields will need to be completed. If the scanner was unable to read a check amount due to illegible handwriting or smeared ink, it may ask you to enter the total after verifying it against the check.
Step 8: When all fields are completed, check the total at the bottom to ensure it matches the total you arrived at earlier.
Step 9: Transmit the checks for deposit.
Step 10: Once the deposit has been successfully transmitted, print out the confirmation page and band it with all the checks included in the deposit.
Step 11: Keep all checks and receipts in a safe place for a minimum of 30 days to ensure the item clears at the receiving bank and the funds are collected.
Step 12: After all items have cleared, all physical checks must be shredded for security reasons.
Pros & Cons of Remote Deposit Capture
| PROS | CONS |
|---|---|
| Deposits can be transmitted any time of day or night. | Scanner failure or internet outages can delay processing. |
| Trips to the bank are not required. | Additional cost if check scanner is required. |
| Multiple employees can participate in a particular portion of the deposit process. | Damaged checks will need to be delivered to the branch for processing or the account owner will need a replacement check. |
Types of Businesses That Benefit From Remote Deposit Capture
RDC is beneficial to any small business owner who wants the convenience of being able to deposit checks remotely using a computer or a smartphone and an internet connection. This is a convenient option for those who are always on the go and may not have time to go to a bank’s physical branch to process their check deposits.
RDC is best for the following types of businesses:
- Businesses using an online bank prefer to do most of their banking transactions online because they don’t want to go through the hassle of going to a branch—hence, they will find RDC useful.
- Businesses that are a distance from their bank will benefit from the RDC service because they won’t have to travel to the bank to process check deposits.
- Businesses needing to make deposits outside of banking hours find remote deposit helpful since banking hours are when business owners are most likely working. Using the RDC feature will help businesses manage their time by allowing them to make deposits outside banking hours.
- Businesses receiving most of their payments electronically would also benefit from RDC because it lets them process the occasional paper check checks they receive directly.
- Business owners who travel will benefit from RDC as it allows them to process check transactions wherever they are—as long as they have internet access.
Methods of Depositing Checks Remotely
The addition of technology to banking has opened up a few methods of depositing checks remotely. It’s important to note three different electronic gateways to make a deposit remotely and two platforms supporting these deposits.
The three methods are:
- Using a check scanner through the treasury management platform
- Using a mobile device or tablet through the treasury management platform
- Using the regular online banking app
The two platforms are:
- Treasury management business online banking
- Regular online banking
I’ve assisted many businesses over the years with their treasury management services. Choosing the right type of remote deposit capture is key to a good financial management plan. Let’s break each method down so that you’ll know which method of remote deposit is right for you.
RDC using treasury management is probably the most commonly used method by businesses that collect large quantities of paper checks. This method of check capture is done using a check scanner. This is a special type of scanner used only for checks with the ability to capture the front and back of a check with one pass-thru. The checks are loaded into a hopper and scanned in an upright position. These scanners are designed to read Magnetic Ink Character Recognition (MICR) and Optical Character Recognition (OCR).
Unlike regular online banking, treasury management is filled with cash management solutions like Automatic Clearing House (ACH), online international and domestic wires, positive pay, payroll services, cash sweep automation, and, of course, RDC. SincerRDC runs under this platform, it has all the built-in fraud protection measures to help keep business funds safe.
Mobile RDC is very similar to regular RDC. The main difference with this method is the tool you use to convert the check from a paper version to an electronic version. Mobile RDC will use the camera on your device to take a picture of the check and add it to a queue for processing. The platform where the check is processed is still the upgraded version of online banking with all the additional fraud protection features. The MICR recognition does not work with this method however the OCR does.
Regular mobile deposit is available to account holders of personal and business checking accounts. It allows you to make deposits through the bank’s dedicated app by engaging the camera on your device. After the image is saved, you can transmit the check images directly to the bank. While this is a method of depositing checks remotely, it is not considered RDC. This is a feature of standard online banking.
Is Remote Deposit Capture Safe?
Yes, RDC is considered a safe method of transmitting check images to a bank for deposit. In general, banks have strong procedures in place that can help protect against potentially fraudulent transactions. In addition, those using a stand-up scanner have access to hardware and software designed to spot a fraudulent or altered check. With any computer-based program, it’s important to have measures in place at your home or office to prevent fraud. These include using a Virtual Private Network (VPN) or a secure network when accessing bank information and ensuring your virus protection is up to date.
It’s also a good practice to allow your treasury representative to personally install all the software and hardware needed on each device or computer used by your organization. This will allow them to test the equipment and confirm you are connected to the right platform your bank uses for check transmission. Downloading a random program online can often lead to issues with security and delivery.
What Is a Virtual Endorsement?
When making a deposit remotely, it’s important to ensure that the checks have been endorsed properly. Some banking institutions can add a virtual endorsement to each check as it passes through the scanner. This appears as if you stamped it “For Deposit Only” and added your account details underneath. A virtual endorsement is helpful if you have it programmed so it’s automatically added to each check.
Although the virtual endorsement will appear on the back of the check when received at the bank, it will be invisible to the naked eye. It’s still important to confirm with your bank if they require a physical signature in addition to a virtual signature. Some institutions allow the virtual endorsement without any other information while other banks require a physical stamp or signature to be added.
How to Prevent a Duplicate Deposit
If a business accidentally tries to process a batch that has already been deposited, the scanned items will be flagged as duplicates. While this is not a fraudulent issue, the items will be kicked out of the deposit since the system knows these items have already been processed. This is a great feature to prevent internal mistakes from triggering a duplicate deposit and accidentally drafting your customer’s account two times.
Frequently Asked Questions (FAQs)
No. Mobile deposit is a feature available through the bank’s online banking app available to personal and business customers alike. Meanwhile, RDC is an upgraded version of online banking running through the treasury management platform allowing personalized login features for internal team members. This allows different employees to participate in deposit functions with added fraud protection and security measures to prevent alterations and fraudulent checks from processing.
Every bank has different timelines for check storage. In general, it’s a good practice to keep all physical copies until you are certain the check deposited has reached the bank it was drawn on and the funds have been collected. Disposing of a check too soon may result in issues if the check image is inadequate and needs to be rescanned. After the funds have been collected, checks will need to be shredded or destroyed for security reasons.
Bottom Line
RDC allows business owners to make deposits from the comfort of their home or office using a scanner or mobile device. Anti-fraud features have been added to the software and hardware to prevent alterations or fraudulent items from being processed. This method of check depositing is a treasury management service that runs through an upgraded robust version of online banking and saves business owners time and money with fewer trips to their local branch.
