RDM - in the NY Timeshttps://www.nytimes.com/2006/11/09/business/09sbiz.html?_r=1&ei=5087%0A&em=&en=1807a814aad5f2a4&ex=1163221200&adxnnl=1&adxnnlx=1163174775-33DaUzFHBoPPT58vlhbvcQ&oref=slogin
Sparing Paper Checks That Last Trip to the Bank
Emile Wamsteker for The New York Times
Jack Longo, an owner of the Stone Age, recently started scanning checks for deposit. He estimates that it saves him five hours a week.
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By DAVID S. JOACHIM
Published: November 9, 2006
The wide availability of automated teller machines, Web banking and electronic payroll deposits has made banks an almost abstract concept. About the only time you need to visit a branch these days is to deposit a check.
And now even that trip is becoming obsolete. Many small businesses are starting to use scanners specially designed to turn paper checks into screen images that can be deposited over the Internet, without having to leave the office.
The practice, called remote deposit, has trickled down from companies that process huge volumes of checks, like the credit card companies. After a federal law was passed in 2003 giving digital check images the same legal weight as paper checks, these companies set up operations to scan the checks they receive from customers and deposit them electronically, en masse.
Now banks are issuing miniature versions of those scanners to their small-business customers. The Stone Age, a 10-person company that sells stones, bricks, statues and tools to landscapers, started scanning its checks for deposit a few months ago. One of its owners, Jack Longo, estimates that it saves him five hours a week that used to be spent driving to and from the PNC branch about 10 miles away from his office in Totowa, N.J.
Mr. Longo had to go to the bank only twice in August: once because he had a check, for $50,000, that exceeded the dollar limit for remote deposit, and another time because he needed to initiate wire transfers that could be handled only at the branch.
Adding to the benefits, the device — a single-feed scanner made by the RDM Corporation — is connected to the company’s QuickBooks accounting software. After both sides of a check are scanned, the device’s software reads the routing number and dollar value and creates an electronic deposit slip. It also updates the company’s account balances and its accounts-receivable log.
“The computer automatically debits and credits the proper things, and all the bookkeeping is done at that time,” Mr. Longo said. That saves him money on the outside bookkeeper he pays by the hour. The scanner almost never reads the numbers wrong, he added, whereas “manually, you are prone to transposition or entering the wrong amount.”
Over time, the system will also mean less photocopying and filing of paper, though for now, during the pilot phase of PNC’s program, Mr. Longo says that as a backup, he is continuing to keep paper records of the 200 or so checks he receives monthly.
A similar system from Wells Fargo came in handy for Southmost Drywall last September when it moved from Omaha to Fremont, Neb., putting it 45 minutes away from the closest Wells Fargo branch. The company had been banking with Wells Fargo for years, and Mike Zinnel, the company’s controller, did not want to switch banks.
Mr. Zinnel said he liked the system so much that he would use it even if the company were still five minutes from the branch. “You don’t have to worry about employees getting into wrecks on the way to the bank, or someone getting mugged,” he said.
There are other advantages. Companies that use more than one bank because their offices are in different locations can consolidate their accounts using remote deposit, said Mary Pilecki, a technology analyst at Forrester Research. “Banks are offering it primarily to capture that bigger relationship and to hold onto customers,” she said.
While checks do not necessarily clear any faster using remote deposit, the practice does help eliminate “desk float,” or the delay between trips to the bank. Stephanie Sturgis-Griffin, a product manager at Wells Fargo, said she knew of a company in Denver that had a bank branch in its building but would still deposit checks only once a week.
These remote deposit programs, most of them in the pilot phase, are made possible by a 2003 federal law commonly referred to as Check 21. It was passed to keep money moving in the event of another disaster like the 9/11 attacks, which grounded flights across the country.
Soon after the law took effect in 2004, banks started scanning checks to simplify tracking and storing them, and they started using images to clear payments with other banks. Now, many banks, especially the bigger ones, have stopped sending original checks back to account holders with their monthly statements, sending copies instead.
Prices vary widely for the check scanners: The Stone Age paid about $550 to PNC, and Southmost Drywall paid $1,200 to Wells Fargo. Other models are available from manufacturers like Panini, Unisys and Epson.
The scanners can print the date and time of the deposit on the back of checks as they are scanned, much as a bank does when a deposit is made at a branch. But the imprints have no legal standing, and the banks say that most of their customers keep that function turned off.
“I keep it off in case it doesn’t go through,” Mr. Longo said. “All the stamp means is that I scanned it. It doesn’t mean anything else.”
Remote deposit alone does not offer much relief for cash businesses that need to visit a branch regularly for currency and coin exchanges. But Ms. Pilecki, the analyst, said that armored car companies like Brink’s and Loomis Fargo have started offering to collect cash and checks from companies, consolidate them into one check and make the deposit remotely using the check image. Such services can offer relief to mom-and-pop shops that have to close their doors whenever trips to the bank are necessary.
For small businesses of all stripes that are comfortable with computers, remote check deposit could put an end to at least one age-old administrative chore. Karen Larrimer, senior vice president for business banking at PNC, said, “For a certain set of customer, this is the end of the bank run.”
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