In the near future, you might not even have to visit a bank or an ATM to deposit a check. You'll simply snap a couple of photos of it with your cell phone. Applications for that purpose are already available from USAA, a company that provides insurance and banking mainly for military veterans, for Apple Inc.'s iPhone and other mobile devices. JPMorgan Chase & Co., Bank of America Corp. and Citibank are among the banks planning to release similar applications this year.

Although the technology, known as remote-deposit capture, promises to save consumers time, it adds a new wrinkle to concerns about fraud and the privacy of financial data. However, the banks and the technology companies helping them say they have largely overcome these concerns. In addition, with new guidelines from federal regulators, more banks could start to feel comfortable putting the technology in consumer hands.

"Our customers are becoming more and more tech-savvy," says Marylou Dowd, senior vice president for Citibank's mobile banking division. "We're trying to support those people on the go." Here's how the technology works. When a picture of a check is snapped, a computer that receives the image looks for the amount, the check number and the digits on the bottom with information on the check writer's account number and the bank's routing number. A photo of the back of the check verifies that it's been signed by the recipient.

A banking clearinghouse then routes the funds from the check writer's account to that of the recipient. That also prevents the same check from being deposited multiple times.

Remote-deposit capture started as a way for large companies and financial institutions to process huge numbers of checks without having to ship them around the country. Regulators were surprised when the Sept. 11 terrorist attacks caused delays in financial transactions. With air traffic grounded for several days, the bundles of checks that banks and other businesses needed to move around couldn't get cleared.

So in 2003, Congress passed a law commonly known as Check 21. It allows anyone who receives a check to make a digital image of it rather than having to deliver it physically. The law has led many companies to install scanning machines that digitize thousands of checks at a time for deposit.

The same technology is present in ATM machines used by Bank of America and other institutions so customers can submit checks without a deposit slip.But the technology has had to clear hurdles before making it onto cell phones.

Among other things, banks were concerned about hackers manipulating the process. Banks have tried to improve the security of the technology by making sure that the software used for remote deposit stores no check information on customer devices, says Bob Meara, an analyst with market research firm Celent who tracks the industry. All information leaves a cell phone and is encrypted as it travels to the bank.

Anyone who has taken a photo with a cell phone can predict that banks will sometimes get photos that are blurry or otherwise unreadable. Generally, a bad image will bounce back within half a minute, and customers will be asked to try again, says Jim McShea, chief revenue officer for J&B Software Inc., a company that handles remote-deposit transactions for banks.

Without a good picture, the customer would have to go the old-fashioned route and bring or mail the check to the bank.

The banking industry "has kicked the tires" on remote-deposit capture, McShea says. "They've gone through the due diligence, and they want to get ahead of the next evolution in the technology."

Person-to-person transactions could drive developing world ecommerce
Smartphone shopping is a rapidly expanding form of ecommerce for many online merchants. But another, rarely addressed capability of the mobile commerce is person-to-person sales.

A survey by ABI Research of consumers in seven countries on three continents attempted to calibrate interest in mobile P2P payment and exchange. Although similar services for online shopping, like Paypal, are vastly popular, few respondents in Western Europe or the United States showed interest. In the three Asia Pacific countries included in the study, however, interest was significantly higher.

"This survey confirms ABI Research's assessment of mobile P2P's potential in the United States and Europe," says ABI senior analyst Mark Beccue. "We believe it will have minimum impact in these markets because some forms of electronic P2P such as PayPal have operated there for several years with relatively low market penetration; and because these markets boast extensive ATM and banking networks, giving consumers easy access to cash to conveniently conduct P2P transactions."

However, Beccue also estimated that in parts of Africa, Asia and Latin America that "lack good tools for convenient P2P transactions other than face-to-face, mobile payment methods will be huge."

However, with mobile shopping in general a young and rapidly developing field, demand may change. According to an earlier ABI report, total mobile commerce revenue went from $396 million in during 2008 to $1.2 billion in 2009.

 

 

 

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