Strong Remote Deposit Capture Agreements

by Jeff Andersen

Three key considerations in an arena with little formal guidance

Remote deposit capture is a concept shaking up the industry. It is one of the reasons people actually understand the value of mobile banking, according to Mary Monahan, an executive vice president and research director for Javelin Research. Mobile remote deposit capture — in which individuals use smartphones to take a picture of a check for deposit — is becoming so popular, credit unions may actually be able to charge for the product while saving overhead costs at the same time.

As the pixel clarity improves with each new generation of smartphone, so does the capture rate of data. Citibank, Chase, Bank of America, as well as a fair number of smaller banks and credit unions, are already offering the service.

Monahan believes the value comes from making RDC a foundational piece of the mobile financial services strategy (Source: American Banker: The Power of Mobile Remote Deposit Capture. June 12, 2012). We couldn’t agree more.

Buzz Kill

Despite the buzz around RDC technology, this offering also poses unique risks. When you move that check through the system—the one a member snapped a photo of—as a credit union, you are making representations and warranties regarding the check, as mandated by regulation. For that reason, you must ensure that proper indemnifications and warranties adhere to the member transmitting the check image to your credit union.

And, in a rare occurrence in the current regulatory environment, regulators have not issued regulations specific to remote deposit capture and do not see the immediate need for such regulation. This was stated in an August report from the Federal Reserve’s Mobile Payments Industry Workgroup.

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