These references are intended solely to provide a retail payment systems overview and should not be construed as an FFIEC endorsement of any product or service noted herein.
Much of the guidance in this booklet, involving traditional retail payment systems, has not been revised significantly because of the maturity of these systems in the product life cycle.
Financial institutions have a greater degree of control over RDC activities deployed at wholly owned or controlled locations. These procedures address services and products of varied complexity; therefore, examiners should adjust the procedures, as appropriate, for the scope of the examination and the risk profile of the institution.
Retail Payment Systems Risk Management-The third section describes the risks associated with various retail payment systems and instruments, using the regulatory risk categories: Although remote deposit-taking is not a new activity, RDC should be viewed as a new delivery system and not simply as a new service.
However, independent third parties are increasingly involved in this process, introducing new risks that affect the security of financial institutions. Client adoption of remote deposit capture is projected to reach 1 million in the next two years, and grow to over 5 million by USAA in became the first bank to permit customers to deposit checks with a smartphone.
Advocates of Check 21 claim that remote deposit saves time and money because businesses who use it no longer have to send an employee or a courier to take their checks to the bank. Remote Deposit Capture Remote Deposit Capture Remote Deposit Capture RDCthe digital processing of paper checks and monetary instruments at remote locations for deposit and clearing through the check image or ACH networks, has expanded rapidly in recent years and is being used at financial institutions and at customer locations.
Bounced checks also show up faster when processed through remote deposit. Beforeif someone deposited a check from one bank for example, PNC Bank into an account at a different bank for example, Bank of Americathe banks would have to physically exchange the paper check before the money would be credited to the account.
RDC is effectively replacing correspondent cash letter pouch activity. RDC also may include the electronic capture of deposit information comprised of cash or other items such as electronic deposits made through a remote safekeeping arrangement at the customer location or through another intermediary.
Examiners should use the examination procedures for evaluating the risks and risk management practices at financial institutions offering retail payment system products and services. Management should incorporate their assessments of RDC systems, including products and services, into existing risk assessment processes.
Operational risks at the customer location include unauthorized access to technology systems and electronic data images, an inability to maintain system compatibility with financial institution systems, ineffective controls over physical deposit handling and storage procedures, inadequate record retention programs, and exposure to money laundering and fraud.
The images, along with other verification information, are transmitted to the bank, where final validation occurs. Mature payment systems are better understood, whereas emerging payment systems require a closer look to better understand the risks and associated controls.
In some cases, financial institutions perform all of these tasks. Diagrams showing the typical payment flows and clearing and settlement arrangements for each of the retail payment instruments described are also included.
In addition to describing the IT risks and controls, the booklet also discusses certain credit and liquidity risks that may also be present when providing retail payment services. Members were already able to submit checks for deposit by using a scanner and secure web portal.
Another trend associated with emerging payments is the increased participation of nonbank third parties in retail payment systems and a lengthened transaction chain, which may increase risk in payment processes.
Additional emphasis is placed on the need for improved operational, credit, legal, and compliance risk processes for retail payment products, especially for the deployment of remote and Internet-based check and ACH capture systems.
Financial institutions, acting either in consortiums or independently, remain the core providers to businesses and consumers for most retail payment instruments and services.
Also, this booklet includes a new section that covers some emerging technologies in retail payment systems. Management of retail payments risk is increasingly difficult and requires diligent oversight of third-party service providers.
Recently, a number of new payment instruments have emerged that are largely or wholly electronic. Now that checks can be cashed and cleared electronically, it is theoretically possible for a bank to take the money out of a checking account on the same day a check is used in payment.
Another potential benefit is that it cuts down on paperwork, and therefore reduces the chances of making mistakes or losing checks in the process of depositing them. Often, this additional processing time allows the corporation to deposit more items at an earlier cutoff time than they otherwise would.
Implications for businesses and consumers[ edit ] A side effect of the Check 21 Act is that, because the digital image of a check is now considered a legal document, bank customers who get paid with a check can scan an image of the check and deposit it into their account from their home or office if their bank supports doing so.
A June survey by group Independent Community Bankers of America found that 62 percent of banks in the United States currently offered merchant remote deposit, and 78 percent have plans to adopt the technology by Prior to implementing RDC, senior management should identify and assess the legal, compliance, reputation, and operational risks associated with the new system.
The customer does not mail in the original check, instead voiding or discarding it. This reduction of the transportation time from total processing life cycle of a check provides a longer time for the corporation to process the checks.
Examination guidance for Retail Payment Systems is provided in three sections, followed by examination procedures, a glossary, and references:Deposit checks directly from your place of business with Remote Deposit.
Simply scan checks right at your desktop using a small scanner that electronically sends the images to United Security Bank for deposit. Remote Deposit Remote Deposit Capture Services Overview Our Remote Deposit Services allow clients to make deposits anytime, anywhere.
No mailing, no driving, no hassle — now scan and upload your checks for deposit, instantly! Xpress Deposit Capture (XDC) Xpress Deposit Capture enables consumers and small businesses to deposit. replaced by remote deposit capture products and services. The Federal Reserve estimates that 17% of checks paid in entered depositary banks as electronic images sent using mobile phone cameras or other remote capture devices.
The Bank of America Small Business Remote Deposit Online Service is governed by our Small Business Remote Deposit Online Service Agreement which you can access through the Important Customer Documents link. Remote Deposit Capture, in its most simple terms, is a service which allows a user to scan checks and transmit the scanned images and /.
The History of Remote Deposit Capture Remote deposit got its start in with the passage of the Check 21 Act, which gave scanned images of checks the same legal standing as the original paper documents.Download