Old Fashioned Check Deposits Evolve With Technology

Greg Imlay is Marketing Director for DirectFED Payment Solutions. He has more than a decade of experience in the payments industry and I’ve asked him to help us understand the importance of depositing checks – from your office desk – instead of at the bank.
Mention a check processing service to the average business, and they often say “we’re
happy with the way we’re handling checks already.” But explain some of the costs –
both obvious and hidden – and they’re likely to be more interested.
Remote Deposit Capture (RDC) is a relatively new and useful technology that offers
significant advantages over “business as usual” with regard to check processing.
Remote Deposit Capture allows businesses to accurately scan the checks they receive
from their customers directly into their computers and uploads the images and related
data to a secure Internet destination. From there, they get routed through the Federal
Reserve check clearing system, and the funds are credited to the appropriate bank account – generally overnight.

Why This Matters
Businesses no longer need to take the time to send staff to the bank to make
deposits. RDC eliminates the need for the checks to be transported to the bank.
This reduction of the transportation time from the total processing lifecycle of a
check can allow your staff to better spend time attending to customers or solving
other issues
Accelerated Clearing Times
Business owners gain overnight credit for deposits. Fast cash flow is always
important, but especially when banks perform account analysis, where
uncollected funds cost more by reducing earnings.
Lower bank fees. Generally, banks charge $0.10 or more for each check
deposited. For businesses that use RDC services, banks typically charge less than
$0.03 each.
Faster notification about returns for Non Sufficient Funds (NSFs) – generally
within 24 hours. This allows businesses to minimize risk, and can improve their
chances of collecting through an alternative form of payment.
Improved Availability
RDC gives businesses and merchants a wider selection of banks. With RDC,
businesses have the opportunity to open accounts with banks outside of their local
neighborhoods. This is especially important for certain “high risk” businesses
that have trouble finding a local bank willing to take them on.
With RDC systems like Skyline’s DirectFED Payment Solutions, business owners
have an archive of check images which is both easy to use and fully encrypted to
maintain confidentiality.
Consolidation of Banking Relationships
No longer does a business need to have the local bank around the corner to make check
deposits. With an RDC solution, there are no longer boundaries. The combination of
business portability and competition between banks for deposits can prove to be a bonus
for merchants.
RDC systems simplify accounting by allowing consolidation of banking
relationships. Multi-location businesses often keep multiple bank accounts so
each location may maintain individual relationships with their local bank. This
creates more confusion with reconciling of accounts and other accounting tasks.
With RDC, remote locations can still scan checks and deposit them to one single
bank account no matter what the volume of deposits are.
Evaluating an RDC system
In finding RDC systems that serve all their needs, businesses should consider all of the
factors of the service to ensure that they are getting the best solution for their business.
Make sure the software is easy to use and processes quickly.
Be wary of companies that attempt to sell larger scanners than necessary. Also,
make sure that the scanner is large enough to handle the business needs (i.e.
companies that accept a large number of checks need larger scanners).
Companies like DirectFED Payment Solutions are flexible, allowing business
owners to choose from more than 70 different brands and models of scanners.
Engage in a product demonstration to receive proper instruction on procedures.
What is the rate of misreads for the company’s software and hardware? The lower
the number, the more efficient your scanning operation will be. It’s important to
remember that any scanner can occasionally misread checks, but some RDC
companies sell products with higher misread rates than others.
As more banks begin to use image exchange for clearing, as well as other Check-21
enabled products from the Federal Reserve and others, clearing capabilities and success rates will improve even further. In 2005, the Fed indicated they return less than half of 1% (0.005%) of items due to poor image quality.