Eliminating the Scourge of Paper Checks

By Miranda Marquit, special to MainStreet.

Online banking has made it possible for you to take care of most of your needs any time of the day, whether transferring money between accounts or paying bills.

You can do this from anywhere with Internet access. Direct deposit further simplifies the process by eliminating paper paychecks. But even with PayPal and automatic deposit, sometimes you still end up with a paper check. And that means a trip to the bank. Unless your bank offers remote deposit.

Right now, the 150 largest banks offer this service, which allows you to fax or email checks to your bank for deposit. Among those who do are Key Bank ( KEY), Wells Fargo ( WFC) , JPMorgan Chase ( JPM), Citigroup ( C) and Bank of America ( BAC). Many regional banks provide remote deposit services as well. According to the Community Bankers of America, 50% of banks offer remote deposit, and 70% plan to have it by next year. However, this service is currently most popular with business clients and they charge monthly fees (anywhere between $30 and $125), and require the purchase of a special check scanner.

Most banks will take personal checks from consumers within this system, but few bank customers have enough checks to deposit every month to justify the monthly fees. One bank, however, offers free individual remote deposit. USAA is a bank for military service personnel and their families, and allows its customers to log on and use their own equipment to participate in direct deposit fee-free through the Direct@Home program. The real question is whether more banks will follow suit, allowing customers the convenience of depositing their checks online.

Remote deposit was made possible in 2004 when Check 21 was passed. This law states that physical checks need not be present if the image of the check has sufficiently high resolution. With remote deposit, both sides of the check are imaged and sent to the bank over the Internet. Many businesses already use this service to handle large volumes of checks more easily. Remote check deposit is as safe as other online banking transaction, and normal protection under the law is received for fraud and mistakes.

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