Scanning Your Money to the Bank

By Saul Hansell

Here’s advance word of another bit of Rorschach technology: Some people will look at it as a great innovation, others as a solution to a problem they don’t have.

Soon you will be able to deposit checks by scanning them at home and sending them electronically to your bank. No need to visit a branch or even an ATM.

This is possible because of the Check Clearing for the 21st Century Act, passed in 2003, which allows banks to exchange electronic images of checks. Already about half of all checks are scanned by businesses or the banks they are deposited into and not shipped in bags back to the banks on which they were drawn.

Fiserv, the big transaction services company, has announced new software that will enable banks to let home users deposit checks by scanning them. It already has a similar service for small and medium businesses. USAA, the financial services company that serves the military, has offered deposits through scanners for two years, but the idea has not yet caught on.

The time is right for such a service, said Rodney Springhetti, a Fiserv vice president of business development. The technology has been debugged through several years of working with businesses, and meanwhile consumers increasingly have scanners at home, largely in the form of all-in-one printer units.


To use the service, consumers would sign onto their bank’s Web site, activate a piece of software, type in the amount, and then scan the front and back side of each check they want to deposit. The bank has the option of immediately sending the check image to be cleared or to have a human review it first.

Mr. Springhetti said that some banks may charge an extra fee for this service, but others may give it free to customers. He expects it will be especially popular among brokerage firms and banks that deal with more affluent customers.

Fraud, of course, is an issue. Where there are scanners, of course, there may be Photoshop. And a scanner can’t detect all the anti-fraud features now built into paper checks, such as special stock and watermarks. Banking groups are developing new anti-fraud technologies that can be detected by scanners, but these have not been widely deployed. Unlike credit cards, which have strict federal anti-fraud rules, each bank sets its own policies for check fraud.

Still, Mr. Springhetti, said there are ways to combat fraud. Fiserv and others do have software meant to analyze images for signs of fakery. And there are other models that look for suspicious patterns of behavior that may indicate fraud.

Put me down in the category of people who would be glad to use this sort of thing, assuming it was free. Diverting myself to make a deposit in the bank adds nothing to my life.

But it also shows that there is something seriously out of whack about the way the banking system has evolved.

In the electronic age, there really isn’t a need to use paper at all to get money from one bank’s computer to another bank’s computer. But the system of routing and account numbers used for direct deposit is simply too cumbersome to use for payments. It can’t be that hard to figure out a better way. But for now, we’re either going to the bank or trying to get our scanners to work right.

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Michael P. February 7, 2008 · 6:34 pm

I’ve been using it with USAA (as you mention) for quite some time. It’s great, especially since the bank doesn’t have any local ATMs, so I used to have to mail deposits. It’s super easy!

Bill G February 7, 2008 · 7:24 pm

As Michael, I have used USAA’s service occasionally over the past couple years.

While it is easy, it’s even easier to fill out the deposit slip and drop the checks into the prepaid preaddressed envelopes from the bank.

Since it is rare that I have a large or important check to deposit and need the funds right away, I don’t see the upside of the scanning process.

Rob Safuto February 7, 2008 · 9:00 pm

I have also been using the USAA check scanning service since it’s inception. The service works very well. I’ve never had a problem depositing a check. Other banks could save their customers plenty of time by offering this great service.

Bobby G. February 7, 2008 · 9:24 pm

This is really the only way to go. I too have been using USAA’s Deposit@Home system for quite a while and it makes everything incredibly simple. I’m surprised this didn’t catch on earlier.

Sid February 7, 2008 · 9:25 pm

Been using USAA for years. I didn’t think it was anything special….

Dan Corcoran February 7, 2008 · 9:33 pm

I, too, have been using this service offered by USAA. There’s something very satisfying about receiving a check in the mail on Saturday afternoon and depositing it electronically that same day. It is credited to your account immediately, so that it is available to cover checks you have written or to begin earning interest, as the case may be.

No trip to the bank, no deposit slip, no envelope, no postage. And, of course, I wouldn’t be using the service it weren’t free.

jahman February 7, 2008 · 9:51 pm

QUOTE
the system of routing and account numbers used for direct deposit is simply too cumbersome to use for payments
UNQUOTE

Only if you have susages for fingers! You really think for most people scanning a check is easier than keying-in a few numbers?

In most Home Banking web sites you only enter the number once for each payee. The payment info is then ready for you to use any time, anywhere.

Have your bank enroll you at your local Community College for Computer Science 101: “The Keyboard Numberical Keys and How to Use Them.” :-D

Mark S. February 7, 2008 · 10:08 pm

I’m also a USAA member and LOVE this service. It’s super easy once you’ve configured your scanner to scan in b&w at 200 dpi. The money is instantly available as well. USAA is definitely on the cutting edge due to their geographically scattered customer base.

Damien Taylor February 7, 2008 · 10:23 pm

This is a fantastic idea, and one whose time is overdue. It’s amazing to still hear banks explain delays with the ludicrous “since this state is from out of state, it must be mailed across the country for your check to clear.”

I’m told some banks just use the Check Clearing Act as a way to make more money on the float – while they have processed your check electronically, they make money on the 5 business days that elapse between them receiving your funds and releasing them to you.

I use Schwab (why not get all the benefits of a free checking account at a retail bank- AND earn interest on your money), and need to make deposits by mail, so this would be a massive convenience.

Damien
Madness and Petulance
//madpet.wordpress.com

FredCW February 7, 2008 · 10:36 pm

I’ve tried it with USAA a half dozen times without success, including spending phone time with the bank’s tech reps. I was told it was because my HP Multifunction laser printer/scanner/copier was too old. Well, it works just fine doing those functions otherwise. Don’t bother anymore – why waste anymore of my time, I send the deposits by mail.

Jonas P February 7, 2008 · 11:46 pm

I envy the USAA customers.

The idea of processing paper still seems rather tedious. I’d still be interested in using the service since checks tend to sit on my desk for a week before I deposit them. I can definitely see HSBC Online and/or ING Direct being the other banks that will try this scanning technology in the near future – as I would have to mail physical checks in directly (which is a reason I still also have a brick and mortar bank).

Internet only banks like ING Direct have tried to cut out the paper equation directly by having truly electronic checking. The only downside is most people are still weary of entering banking information online.

The service allows you to send personal electronic checks to individuals. The recepient receives an e-mail indicating that you’ve sent them a check. They then have to enter their banking information on ING’s website to get the transfer of funds. Hence, the apprehension with some of my recipients.

The addition of this scanning technology would make a truly internet bank even more convenient.

LH February 8, 2008 · 12:35 am

Frankly, this scares me. How can I be sure that someone won’t scan deposit my check to 1 account, and then, several days later, deposit it to an account in another bank?

G B Josephson February 8, 2008 · 12:48 am

Guess I am suprised that other banks aren’t offering a similiar capability to USAA’s Deposit@Home service. For me, as one of their widely dispersed customers, it is an absolutely easy and valuable service. Just another application of technology to make things less complicated.

Doris February 8, 2008 · 12:57 am

I’m currently living in the Czech Republic, where the concept of paper checks is apparently unknown. I don’t write a rent check to my landlord, for example. Instead, I have his account number and his bank’s routing number. I used this to connect online to my bank and authorize a recurring transfer of funds from my account to his. So, if the Czechs have figured out how to bypass paper in favor of using of account numbers and routing numbers, I should think that American banks & customers should be able to do likewise!

Walt D February 8, 2008 · 1:03 am

A negative side to the Check Clearing Act: if a bank does not return the physical check, and you need it for a lawsuit or criminal investigation, you’ll have problems. For example,if you have to prove you paid something many years ago (for instance to get a rental deposit back, or if you paid first month/last month), the photo-reduced copy you get on a bank statement does not always hold up as proof in court in a suit. With no original, you will be up the creek.

Also, my bank statements only show an image of the front of the checks, and information like the deposit signature isn’t shown. Proving fraud then becomes a problem. Also, the bank doesn’t have to retain the image after a certain number of years. This legislation seems passed solely to benefit the banking industry, and the side effects ignored. Thank you, Congress.

Evan Thede February 8, 2008 · 1:37 am

Living in Germany for the past 6 years, I haven’t even seen a check. The concept here is somehow a bit laughable, as payment online through internet banking is the absolute norm, and bank transfers take less than a minute to complete.

Bill G February 8, 2008 · 1:52 am

My comment is #2 above and reading over those that followed were quite interesting. The entire value of the USAA scanning service is immediate access to your money, if not for that, mailing the checks is less time consuming and still free.

Jon February 8, 2008 · 2:04 am

This will certainly benefit people who use an internet bank for their checking account. These accounts pay a good rate and reimburse ATM fees that other banks charge for using their ATM.

But with all of the benefits that an internet account offers, there remains one major hassle – getting money into the account.

Sending checks by mail is the main option for people who use this as their only bank account. A scanner would greatly improve the usefulness (and convenience) of an internet checking account.

Jon
//www.emoneycentral.com

Riga Rooster February 8, 2008 · 2:23 am

–

maybe it time the USA learned from the European IBAN account number scheme.

Simple electronic Internet Bank transfers between companies and individuals is a daily occurance in Europe.

In the country of Latvia where I have lived for 9 years now, no one has ever seen a paper check. They are unheard of.

It can be done easily and safely – USA

Manny C. February 8, 2008 · 2:51 am

Also use USAA home deposit.
No worries about your mail being lost, or whether you have the right postage.
Other advantages have been posted by others.
Besides, it’s one of the few times I use my scanner.
But if they start charging for it, I’ll return to regular mail.
Don’t expect USAA to charge though, they have been leaders in good technology and common sense.
I haven’t used a local bank in years.

Mark February 8, 2008 · 4:01 am

I moved to Switzerland last year and they have eliminated this problem by eliminating checks. Everything is done by electronic banking. There are no checks. Works great!

Jon S February 8, 2008 · 4:39 am

There is an easier way than moving paper. Using the same infrastructure that brought about direct deposit and Check 21 (the automated clearinghouse system), a number of banks, ING Direct being one, let you send money to anybody with their account and routing numbers–the numbers at the bottom of the check.

However, try asking random people that information. What do you think will happen if you ask your neighbor for that info. As the bank points out, if you wrote a paper check, it would come back with the same information on the back. The US banking infrastructure is there and it exists, the problem is with the users who hang on to paper.

Fred Glick February 8, 2008 · 4:43 am

In the UK the on-line payment systems are terribly simple. Every account has a six digit sort code (ie. 00-00-00), which is equivalent to the ABA code in the US, and an account number which is eight digits. Very easy and I can bang in a new payment faster than I can write a cheque. Presumably it’s also much cheaper for the banks than handling all that paper.

The US system can be cumbersome, particularly if you’re using a broker. If I want someone to make a direct payment into my Fidelity account I first need to figure out what means they’re going to use to send the money (wire, ABA transfer, international wire) and then give them a whole slew of numbers based on that information. It’s a pain and with that many numbers I have to believe the chances of an error are increased.

Tom February 8, 2008 · 4:59 am

I’m perplexed by the hubbub over this “cutting edge” technology. In Europe such transactions are done by bank transfers from the convenience of one’s home. I have not had to deposit or write a check in 25 years and my account statements are available to me electronically off-line. The bank – which is not “Internet Only – rewards me for going paperless with a 50 (Euro) cent credit per transaction to boot. Or have I missed something?

Robert A Williams February 8, 2008 · 5:48 am

I live in Belgium and our banks are centuries ahead of U.S. banks. I access my account in my bank on the Web. I type in the amount to pay, make a checkmark at the name of the recipient which has his bank details and retains it for future payments. I sign the payment by using a small plastic gadget which resembles a pocket computer and works with info provided by the bank when I log in. The software then tells me my new balance. I can make payments to ANY COUNTRY in the Euro area! The payment is transferred immediately AND I can do this at any time of day or any day. I think that someone in the bank actuates all of the transfers at once – no need for individual attention to each transfer.