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Digital cheque images now legal in Canada

New app will let you use your smartphone to instantly deposit cheques to banks
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Gina Monaco, May 13, 2013 1:28:22 PM

Here’s a convenient app — deposit a cheque to your bank account with snap of your Smartphone. No need to leave home. It’s neat and simple and it’s all legal. A few credit unions have come on board through Central1 Credit Union. A major bank will soon announce its participation. This innovation will bring us much closer to truly paperless banking.

It’s been a long time coming. In 2001, financial institutions in Canada and the U.S. were working together to effort to take chequing online. Then the September 11, 2001 terrorist attacks halted the processing of all cheques and crippled North American banking. In 2006, the U.S. resolved its banking issues and rolled out Check 21, which allowed the electronic transfer of cheques. Regulatory barriers stopped the Canadian initiative.  Last year, the challenges with electronic imaging were resolved according to the Canadian Payments Association, which regulates payment processing in Canada, clearing the way for digital cheque deposits.

It’s hard to believe that over 2 million cheques are still written every day in Canada according to the Canadian Payments Association, with small to-mid-size businesses making up 80 per cent of those payments. This will certainly be a boon to businesses like contractors, painters and landscapers who take cheques as payment but are too busy to get to the bank to deposit them. And yes, you get access to the funds immediately, depending on the arrangement with your financial institution.

Okay, I know what you’re asking. Is it secure? What about fraudsters? We have the ability to digitally alter images so why not add a few zeros to the cheque? Or can someone take a snap of a cheque written to someone else and deposit it?  Ahhhh… yeah. However, it’s the same as committing fraud with paper cheques. The crime gets detected after the fact, whether using a paper cheque or a digital one. Banks in the U.S have been online with digital deposits since 2009 and have not seen an increase in cheque fraud.  It’s an idea whose time has come.

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Gina Monaco

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