The Killer App That Can Spare Us All Trips to the Bank

Banks have been trying to keep account holders out of their branches for decades, and they may have finally found the right trick — putting a check cashing service right in your pocket.

It’s known as “remote deposit capture,” or RDC, in the banking industry, and you were probably a little nervous about the idea when you first heard of it. Got a check to deposit? Skip the teller, skip the ATM — just take a picture of the front and back of your check, tap out a few details, and voila! The money lands in your checking account. In truth, the funds will be on hold for a few days, but you get the idea.

The technology was initially developed for small-business clients who had piles of checks to deposit and long-standing credibility with the bank. But in the past decade, big banks have slowly rolled out the feature to consumers they trust — first on their websites, later through mobile apps.

From the bank’s point of view, it’s a no-brainer. When an account holder walks into a branch to deposit a check, all the human handling involved can cost the bank up to $2, according to Shirley Inscoe, a banking analyst at Aite Group. Deposits via mobile phone cost a fraction of a penny.

Mobile checking deposit — called “mRDC” — is incredibly convenient, and now consumers love it. Already, one-third of all retail deposits are made via some form of remote deposit capture, according to research and consulting firm Celent. The firm expects mRDC will account for half of all retail deposits by the middle of next year.

“As check usage continues to decline, mobile RDC will become increasingly relevant — not just for mobile use cases, but more broadly,” says Bob Meara, a senior analyst with Celent’s banking practice.

Consumers who deposit their checks via mobile phones end up with an obvious question: What do you do next with the check, since the piece of paper is still in your hands? The answer isn’t clear, but it’s critical that you don’t dispose of the check immediately. It can take days or, in rare cases, weeks for banks to spot a mistake in a check deposit transaction. If your bank or the check-issuing bank has a problem, you’ll want to be able to refer to the original check. To be safe, some banks recommend holding onto paper checks for 30 to 45 days.

There’s no law governing what to do with the check, and banks have their own policies. For example, here’s what First Dakota National Bank says: “You are required to keep the physical checks in a secure location for a maximum of 14 days. After that time, they must be destroyed using a cross-cut shredder or an incinerator.”

Don’t feel the need to buy an incinerator. Tearing the check up into little pieces is sufficient. If you are really concerned about identity theft, spread the remaining pieces among several loads of recycling.

Keeping paper checks around creates another problem: accidental “double presentment.” Did I cash the check? Did my wife? To avoid that, I place a tiny rip in the top of the check — you might try a tiny red dot from a magic marker — so I know which checks I’ve cashed with my phone.

Are you comfortable using your phone for deposits and other financial transactions? Share with us in comments below or on our Facebook page.