Check Processing for Remote Deposit Capture

• Offers high-speed scanning that captures both check sides and adds auto-endorsement as needed
  
• Complies fully with Check 21 regulations  
• Creates a Check 21 compliant x9.37 cash letter or ACH file for electronic deposit  
• Creates an image archive of checks and payment documents  
• Archives easily to CD, hard drive, or remote storage  
• Supports multiple users, scanning stations, and bank accounts  
• Provides full reporting features and supports batch processing environment  
• Offers next-day notification on NSF payments  
• Provides extensible search features to research and review items  
• Updates accounts receivable by auto-extracting an upload file

What is Check Processing?

By the end of the year 2000, approximately 70 billion checks were written in the United States. 270 million checks are processed every business day. It is a very complex procedure procedure to keep track of that much volume.

Once you receive any check from a customer, the first place that check goes is to your bank, where the paper check is deposited. These funds may not be immediately available unles they are drawn on and deposited into the same bank (banks may say they are, but they are not avail until the bank receives the funds), in which case the processing, or clearing, is handled internally. Otherwise, your bank will want to verify the check with the customers bank (the paying bank) before it converts the check value to cash and available to you. Now, most banks do not have a timely or direct line of communicate with each other. Instead, a middle man is used (the intermediary bank). There are three (3) intermediary banks:

1. Federal Reserve Bank
2. Correspondent bank
3. Clearinghouse corporation

The Federal Reserve Bank is the central bank of the United States. Regional branches of the Federal Reserve handle check processing for banks. Their services are provided for a fee. Such services include-

• check collection
• air transportation of checks to the reserve and
• delivery of checks to paying banks

Reserve Banks handle about 27 percent of U.S. checks. Correspondent banks are banks that bypass the Federal Reserve fee because they have formed "partnerships" with other banks. Some smaller banks go through a correspondent bank to exchange checks and payments, again to avoid the Federal Reserve fee. Correspondent banks sometimes also form a clearinghouse corporation. Members are allowed to exchange checks and payments, which can be inefficient at times when a bank receives thousands of checks per day. These clearinghouse banks accumulate the checks drawn on members and exchange them. Correspondent banks and clearinghouse corporations are in the private sector of check clearing, and in total handle about 43 percent of U.S. checks.

It is clear from the process above that it can take several days before funds are actually available to your bank for deposit. Their must be a better and faster way and there is - Check Processing using Remote Deposit Capture allowed by the the Check 21 Act in 2004.

Check Processing is catching on in more than just one area in finance.