Remote Deposit Capture. Check Processing Benefits for Your Business

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1 Remote Deposit Capture Check Processing Benefits for Your Business 11

2 2 About CrossCheck, Inc. CrossCheck, Inc., an established leader in the payments industry, processes and approves billions of dollars worth of check transactions annually for retail and dealer outlets throughout the U.S. For more than 28 years, its goal has been to increase merchants profits by providing efficient and affordable check approval, guarantee and conversion services that can help increase sales and reduce risk. The company has offices in Petaluma, California and Dallas, Texas. Their suite of services includes check conversion technology, ACH, web-based transactions and remote deposit capture products and, through subsidiary Optio Solutions, cost-effective debt management tools. Visit for more information.

3 3 Background of RDC Paper check processing has been on the road to "electronification" for over twenty years. Even with the introduction of debit cards and check cards, more than 20 billion checks are written each year according to the Federal Reserve Payments Study. As the cost of transportation and labor continues to increase, attempts to provide alternatives to physically depositing a check at one bank to be cleared at another bank, sometimes thousands of miles away, has become a motivating factor to streamlining the process. Add to that, businesses looking to improve operational efficiencies, and retail companies with multiple locations in need of consolidating banking, and the need for a system such as RDC is evident. Electronic check processing and conversion solutions were introduced in the late 1980s and 1990s and had some success, especially for A/R or checks mailed in for payments. Check conversion services for point-of-sale purchases had some stumbling blocks and were slower to be accepted by retailers who were often confused by the technology, did not have the necessary equipment to effectively image the checks or a clear understanding of the process in order to inform their customers. On October 28, 2004, the Check Clearing for the 21st Century Act took effect, and helped move RDC forward. This Act, also known as the Check 21 Act, mandated that banks and institutions create a negotiable instrument called a "substitute check." A substitute check is the legal equivalent of an original check and contains an image of the front and back of a check, allowing it to be processed as a paper check. Rather than requiring the physical check, the substitute check can be cleared and settled electronically. This eliminates the need for a bank to transport checks to other banks and financial institutions across town or across the country for clearing. Checks that qualify for RDC include both consumer and business checks.

4 4 Background of RDC Paper check processing has been on the road to "electronification" for over twenty years. Even with the introduction of debit cards and check cards, more than 20 billion checks are written each year accordig to the Federal Reserve Payments Study. As the cost of transportation and labor continues to increase, attempts to provide alternatives to physically depositing a check at one bank to be cleared at another bank, sometimes thousands of miles away, has become a motivating factor to streamlining the process. Add to that, businesses looking to improve operational efficiencies, and retail companies with multiple locations in need of consolidating banking, and the need for a system such as RDC is evident. Electronic check processing and conversion solutions were introduced in the late 1980s and 1990s and had some success, especially for A/R or checks mailed in for payments. Check conversion services for point-of-sale purchases had some stumbling blocks and were slower to be accepted by retailers who were often confused by the technology, did not have the necessary equipment to effectively image the checks or a clear understanding of the process in order to inform their customers. On October 28, 2004, the Check Clearing for the 21st Century Act took effect, and helped move RDC forward. This Act, also known as the Check 21 Act, mandated that banks and institutions create a negotiable instrument called a "substitute check." A substitute check is the legal equivalent of an original check and contains an image of the front and back of a check, allowing it to be processed as a paper check. Rather than requiring the physical check, the substitute check can be cleared and settled electronically. This eliminates the need for a bank to transport checks to other banks and financial institutions across town or across the country for clearing. Checks that qualify for RDC include both consumer and business checks.

5 5 Benefits of RDC RDC is being adapted at businesses and financial institutions throughout the country and could be the future of check processing and depositing due to its ease of use, low cost of processing equipment and multiple benefits for users and financial institutions. Businesses using RDC benefit by increased productivity and cost-efficiency. Customers benefit by being able to pay by check, a popular and comfortable payment method, at the businesses and stores they visit. Financial institutions benefit through decreased paper handling, less staffing at branch levels and automated processing and returns. Additionally, RDC offers opportunities to utilize banking services from a financial institution that may be out of the area or inconvenient to visit. Benefits include: Reduces or eliminates courier costs Reduces trips to the bank Increased cash flow and access to funds Consolidated reporting and banking Ability to deposit at all times of the day Less time needed to research check payments and deposits Bank relationships not limited by proximity or availability of branch locations and hours of operation Environmentally friendly Reduces chance of lost or stolen checks before deposit RDC is useful for a variety of businesses. Those with a high volume of checks can save a substantial amount of time by scanning and reviewing check deposits online, eliminating handwritten deposit slips and frequent trips to the bank. Businesses with multiple or remote locations can consolidate their banking relationships and direct deposits to one main account. Businesses with hours of operation in conflict with banking hours can use RDC to process checks on weekends and late hours and to make timely deposits, daily, for example, that may be unlikely or cost-prohibitive when a visit to a bank is required.

6 6 How it Works Simply put, RDC enables "desktop deposit" of checks received for payment of goods or services or on account. With a RDC service in place, a business scans a check and sends the check image electronically to their payment provider or financial institution for deposit and funding to their business account. The paper check is stamped VOID and returned or retained but does not go to the bank. RDC is in use today by thousands of retail businesses at the point of sale and by companies that accept mailed-in payments from consumers and other businesses. At the point of sale: The customer writes a paper check The check is scanned via a check reader or imager connected to a PC or register, capturing check information The clerk enters in additional information The check may be verified or guaranteed (depending on the payment provider or financial institution) A receipt prints for the check writer to sign, acknowledging the electronic processing of their check The check is returned or stamped void The check information is uploaded to the payment provider or financial institution for processing as an image-based ACH file and deposited to the merchant's account usually within 1-2 business days For mailed-in checks: The business informs customers of electronic processing through a statement on their invoice A check is sent in for payment The check is scanned via a check imager connected to a PC, capturing check information Check information is entered and confirmed The check may be verified or guaranteed (depending on the payment provider or financial institution) The check stamped void and retained The check information is uploaded to the payment provider or financial institution for processing as an image-based ACH file and deposited to the business' account usually within 1-2 business days

7 7 RDC Service Enhancements RDC services are available through payment providers as well as banks and financial institutions. Many payment providers offer RDC services along with payment services including credit card and gift card processing and have can provide service enhancements such as check verification and guarantee features. Check guarantee, future deposit and industry-specific features offer reduced risk and payment options that benefit both the business and check writer. Some payment providers make account activity available online through a secure web portal for easy record keeping Guarantee programs are available that eliminate claims and items returned for NSF Technology is available for future deposit of multiple checks, enabling a business to spread payments out, with automatic deposit of additional checks over a period of time It may be beneficial to shop around for a RDC service; some payment providers offer competitive pricing, 24/7/365 customer service and loaner equipment at no charge, benefits that may not be available through the user's financial institution.

8 8 Making it Mobile Mobile payments are now making it easier than ever to accept check payments. RDC went mobile in 2010 and businesses and consumers can now take advantage of the ability to deposit checks using special applications on their smart phones. Mobile capabilities are useful for businesses that visit customers when they do deliveries, make repairs or set up seasonal or pop-up retail spaces. As the adoption of smart phones and the acceptance of electronic processing converge, continued growth of RDC is expected, much of it driven by consumers using RDC to deposit their own checks and share in many of the benefits experienced by business users.

9 9 A Checklist Is RDC right for your business? To help determine the cost-savings of a fully-implemented RDC program, time spent on transportation, staffing salaries and recordkeeping of check payments should be considered. Perform an evaluation by looking at the areas and personnel that are involved with banking and reconciliation. Questions that are useful to help evaluate cost savings include: How many checks do you receive per day? What is the average value of the checks? How many trips to the bank do you make each week? What does it cost to travel to and from the bank (mileage)? How long does it take you to travel to and from the bank (minutes)? How much time do you spend in the bank, on average? How many courier deposits do you average per month? What is the cost per courier deposit? How many banking deposit relationships do you have? How long does it take to prepare deposits for banking?

10 10 Getting Started Putting a RDC service to work for most businesses is a quick and affordable process. After contracting with a payment provider or financial institution, the service is easily installed, tested and put into place. The equipment needs are minimal - a scanning device such as a check imager and connection to a PC or terminal along with the RDC software are required. There are a variety of imagers and scanning devices available and the payment provider will confirm compatible equipment. Also, many payment providers loan or rent equipment for a nominal amount. Contact CrossCheck CrossCheck s Remote Deposit Capture Plus service is designed to meet the needs of a variety of businesses, retail stores and auto dealerships. Contact CrossCheck for a demonstration of this convenient service or for more information on the benefits of electronic check processing and guarantee services. Visit or call (888)

11 11 Summary The future looks bright for RDC. The benefits of RDC are unique in that consumers, businesses, and financial institutions all share in the time-saving and cost-effective advantages of this check processing technology. Now available from a majority of banks, financial institutions and payment providers, RDC can be quickly and easily integrated into a business' system, saving staff time and streamlining check handling. In addition to the convenience of being able to "desktop" deposit, businesses can look forward to being mobile and processing checks from remote locations using a smart phone or mobile device. Due to the growing acceptance of RDC and the continued use of paper checks, RDC provides a viable way to keep this favored payment method alive.

12 12 CrossCheck, Inc North Mc Dowell Blvd. Petaluma, CA (888)