Remote Deposit Capture: The Future of Check Processing BB&T Webinar March 28, 2007 Q&A Session

Transcription

1 Remote Deposit Capture: The Future of Check Processing BB&T Webinar March 28, 2007 Q&A Session Q. What types of checks are eligible for remote deposit capture? A. All checks drawn on US banks are eligible for remote deposit capture using the image capture method. Most consumer checks of $25,000 or less are also eligible for the electronic check conversion method (conversion to an ACH transaction), although some restrictions apply, as noted below: Type of Check Consumer-size checks of $25,000 or less, with preprinted serial number, completed and signed by the customer Checks over $25,000 Bank checks (e.g., Money Order Cashier s Checks, Official Checks) Checks with an auxiliary on-us fields (see example below) Eligible for Remote Deposit: Image Capture Method Eligible for Remote Deposit: Electronic Check Conversion / ACH Method Third-party checks State, local or federal government checks Credit card or home equity line convenience checks Consumer-size checks written by or drawn on a business account

2 Figure 1: Consumer-size check without an auxiliary on-us field eligible for both electronic check conversion method and image capture method. Figure 2: Business-size check with an auxiliary on-us field in lower left corner eligible for the image capture method, but not eligible for the electronic check conversion method. Q. If you are a contractor and 95% of your checks are greater than $25,000, is this product available?

3 A., even if all the checks you receive are greater than $25,000, the BB&T remote deposit capture product, OnSite Deposit, may be right for you. Checks over $25,000 can be processed using the image capture method. Q. Why is there a check limit of $25,000? Do you foresee a time when then this limit is eliminated? A. The $25,000 limit is set by NACHA, the electronic payments organization that is the rulemaking body for the ACH network. It is possible that the $25,000 limit may be eliminated at some point in the future, as more and more payment transactions are processed electronically. Q. We have several bank accounts at BB&T. Can one scanner handle processing multiple accounts? Each account is a separate company. A. A single scanner can be used for processing checks for multiple accounts and multiple companies. Q. What happens with the items that are not automatically read by the system? A. The BB&T remote deposit capture product, OnSite Deposit, is typically able to read the hand-written check amounts on 60% of checks. When OnSite is not able to read the check amount or any of the encoded fields on the check, it displays the item on an editing screen, and prompts the operator to key in the missing data. Once the missing data is entered, automated processing of the item is resumed. Q. How would I go about giving notice and the opt-out option to the customer for checks that are mailed to us? A. The image capture method of remote deposit does not require giving the customer notice or providing an opt-out option. To use the electronic check conversion (ACH) method for checks received in the mail, notice and opt-out information can be provided in the billing statement or invoice sent to the customer. Additional details are available at Q. How long are check deposit images available online after the deposit has been made? A. Images of deposited checks are available online through OnSite Deposit for two years from the date of deposit. Images are also available on request for up to seven years following the date of deposit. Q. Once a check is signed, is it cancelled somehow, so that it cannot be transmitted again? A. The OnSite Deposit client is responsible for safeguarding the originals of deposited checks to ensure they are not retransmitted or stolen. Once the original checks have been scanned and the deposit confirmed, the checks may be stamped void or destroyed. The originals must be securely stored until destruction. Q. Do you put the check through the scanner as you take it in at the front desk or in accounting when you do the deposit? A. We generally recommend that the scanning function occur in a central, controlled environment, such as in a back office area, rather than scanning them immediately at the location where they are received from the customer. However, the OnSite Deposit client is free to select the scanning location and timing that best suits the business needs. Q. Can check images be printed? A., checks processed through OnSite Deposit can be printed on a printer attached to the client s PC. Q. Once checks are scanned will they automatically be summed up in a deposit ticket? Is the deposit ticket printable? Can we capture more than one deposit per day? A. OnSite Deposit automatically tracks a running deposit total as checks are scanned, and can produce a printed deposit report once the deposit is settled. OnSite Deposit can handle multiple deposits in a single day. Q. How does this service reduce return item losses? A. The 7 p.m. deposit same-day credit deadline for OnSite Deposit means checks are likely to clear sooner, and are therefore less likely to be returned. Additionally, for items processed as ACH transactions, some banks post electronic debits ahead of paper checks, again making checks processed through OnSite Deposit less likely to be returned. Finally, if a check is returned for insufficient funds, it will be returned more quickly if it was submitted as an electronic check (ACH) transaction, giving the depositor a head start on collecting the check. Q. Do you have any webinars for the use of the scanner? A. BB&T offers toll-free telephone support for its OnSite Deposit clients. If you have questions or problems in using the OnSite Deposit system or equipment, please call between 8:00 a.m. and 5:00 p.m., ET, Monday through Friday.

4 Q. Would you explain sufficient notice to consumer more thoroughly, and does this cause any vendor liability or bank liability? A..When a business submits electronic check conversion transactions to the bank, the business warrants that it has provided the required notices to its customers. Sample customer notices are available at Q. It is our understanding that a consumer can opt out, meaning that they do not want their checks scanned. Is that correct, and how do we handle that? A. Customers may only opt out of the electronic check conversion (ACH) method, but not the image capture method. If the customer presenting the check does not want it converted to an ACH transaction, the business can ask that the customer use another form of payment, or agree to process the check using the image capture method. Q. In reference to deposits posting to the checking account, if 80% post through ACH and 20% post through the image capture method, how do the deposits look on the bank statement? A. There will be two deposits on the bank statement: one for the image portion of the deposit and one for the portion that is converted to ACH. For example, a $10,000 deposit with 80% eligible for ACH conversion will show up as an $8,000 ACH deposit and a $2,000 check deposit. Online detail reporting is also provided that displays the image amount, ACH amount and total deposit amount to assist in reconciling your account. Q. Why would 20% not be converted? A: In the example above, the 20% that would not be converted refers to items that are not eligible for ACH conversion. Examples of items not eligible include business checks with an auxiliary on-us field, consumer checks over $25,000, or without a serial number encoded in the MICR line. These items would be presented using the image method of remote deposit. Q. Is there anything printed on the check once it is scanned to prevent rescanning or depositing locally? A: The process of putting an identifier (scanned or processed) on a check at capture is referred to as franking. There has been a lot of debate about the benefits of franking. BB&T OnSite Deposit does not currently support franking at a single pass because it could limit the ability to reprocess the item, if necessary, due to poor image quality, communication disruption, etc. We are evaluating the creation of a second pass process that would frank the item after you have ensured the deposit is processed to your satisfaction. Q. How easy is it to search for a check image? A: Very easy. BB&T OnSite Deposit provides a robust search capability that allows you to search by account number, dollar amount, check number, date range, etc. We feel we have provided search capabilities to meet all needs. Q. Can the system, at the point of sale, detect bad checks? A: Currently, no, but BB&T is evaluating a future enhancement to OnSite Deposit that would access a bad check database during scanning to detect these items. Q. Do we need to get permission from our customer to put their information on the Internet? Is this the opt-out issue? A:. You do not need the consumer s approval to use remote deposit capture. Customers do have the right to opt-out of the ACH conversion method, but do not have the right to keep you from using remote deposit capture to increase the productivity of your business and reduce your overall costs. Q. We are using Windows Vista. Will we have difficulty using a scanner? Is there a path for Lynux OS? A: We are in the process of certifying Windows Vista with BB&T OnSite Deposit. We do not anticipate any issues with this certification. There is no support for the Lynux Operating System at present. Q. Is there any difference with respect to check fraud? Are checks still subject to a two year return in case of fraud? A: As far as the legal rights of the item, the image replaces the original item in terms of survivability. The image and subsequent substitute check is the legal equivalent to the original item. All previous obligations with respect to the check survive. Q. What happens if I scan a check more than once by mistake?

5 A: If you happen to scan a check a second time, BB&T OnSite Deposit will flag the item as a duplicate and also display the original item that was scanned for your review. Q. How do auditors feel about remote deposit capture? A: In many cases, more information and a more complete audit trail is provided with OnSite Deposit. The OnSite Deposit systems log can identify who made the deposit, when it was submitted and what checks were included. Additionally, with the recent focus on consumer protection and identify theft, many internal audit groups have grown increasingly concerned about the copies that many companies make to ensure a complete audit trail. More timely and accurate information is provided with OnSite Deposit and access to the check images and other data is controlled at the client level. Q. Are there any holds on deposits made through this system? A. As a general rule, deposits made through OnSite Deposits are not subject to holds. Q. Besides the difference of having an image, is there any difference between the image capture and ACH transmission? A: The clearing of the item through ACH is sometimes quicker than clearing a check image. Also, the returns process for ACH is timelier, with returned items typically available in two business days, compared to as many as 10 days for items returned through paper channels. BB&T feels that OnSite Deposit is the best of breed product in that it provides both image and ACH clearing in an integrated solution. Q. How feasible would this be for school lunchrooms? Would you still take cash to the night deposit every day? A: It really depends on the check and cash volumes in the school lunchrooms as to whether OnSite Deposit is a good fit or not. If there is a high volume of checks at the various school locations and each school is having to make deposits in different banking accounts (different banks) there will be benefits to consolidating those relationships into one financial institution to get the most buying power for the deposits. There is also a benefit of reducing the time that employees are away from the office taking deposits to the bank, and having a later deadline for making the deposit each day. As far as cash is concerned, if there is a need to deposit cash on a daily basis, OnSite Deposit might not be a good fit. However, if cash can be held for deposit on a weekly basis, OnSite Deposit might make sense. A BB&T Payment Services consultant can assist in determining if OnSite Deposit is right for you. Q. We have cash coming in along with checks, so it doesn t seem like we will be able to eliminate a trip to the bank. How do other customers handle that? A: It really depends on the amount of cash you receive. We have some customers making fewer trips to the bank (weekly versus daily) or keeping the cash to stock registers. Q. Are there any other concerns we should have in regard to security/fraud through the Internet? A: Information security should always be at the forefront of any decisions you make regarding your business, whether it is Internet or physical security. BB&T has layered in best of breed information security systems to protect the OnSite Deposit and other online banking environments, and we continue to update and evaluate the environment on a very frequent basis. One thing that no financial institution can protect against is fraudulent access through the use of a legitimate password and log in combination. Information security is as much the responsibility of the business as the financial institution. Businesses should make sure that employees are given only the access required for their job duties, and that accounts are reviewed and reconciled on a frequent basis to verify that all activity is authorized. Q. Can the deposited check images be transferred to a CD for permanent records? A. Images of checks deposited through OnSite Deposit are available online for two years; the images are also available on request for an additional five years (total of seven years, as required by state and federal laws). We don t currently provide these images on CD. Q. What accounts receivable (AR) applications can interface with OnSite Deposit? A: BB&T has the ability to create a file of check MICR and deposit information in a.csv format. In addition, our remittance/coupon processing capability will support capture of OCR data for inclusion in an AR posting file in a.csv format. As such, BB&T would be able to interface with AR applications that can process a.csv formatted file. Q. What would be the returned check procedure? Would we have to retrieve the original check to return to the customer?

6 A: If the item is processed as an image, it will be returned to you as a paper substitute check for collection. The substitute check is the legal equivalent of the original check, and you may process it just as you would the original. If the check was deposited as an ACH item, it will be returned electronically and can be automatically redeposited for payment two more times. If a paper copy of the item is needed for manual collection, a substitute check can be obtained through OnSite Deposit. Returned items may be redeposited automatically through OnSite Deposit. Q. Is there any chance that this electronic check, sent through the system and accepted for my deposit, can be returned at some time? A:, checks deposited through remote deposit capture as either images or ACH transactions can be returned for the same reasons as paper checks can be returned. Q. Is there a contract between the vendor and the bank, and if so, what are the general terms? A: BB&T OnSite Deposit service utilizes multiple software and hardware components to deliver the final product. BB&T has a contractual relationship with each party and has safeguards in the event of change of ownership. For example, the source code for all applications supporting remote deposit capture is held in escrow, and clearly defined triggers for accessing the escrow accounts have been established. Many aspects of the OnSite Deposit were developed by BB&T and are proprietary. Q. On the checks that are identified as defaulting to a paper deposit, is the bank going to make the entry or do I need to go to the bank with the entry? A: BB&T OnSite Deposit application creates an electronic deposit ticket for all items; no additional entries are required. Q. Can the software be loaded on to a laptop for onsite transactions such as a tradeshow? Is the scanner portable? A:, the OnSite Deposit software and scanners are portable. With the Web version of OnSite Deposit, only the device driver for the scanner is loaded to the PC. A Web link takes you to the OnSite Deposit application for processing. Your unique personal credentials (password, user ID) take you to your company s profile. Q. We have several employees posting checks each day and each employee runs an audit trail. Would we use a scanner at each posting terminal? How would my bank statement reflect these deposits? A: You may choose the process that works best for your business. You could collect all of your checks and scan and submit them centrally or you could choose to use a scanner at each posting terminal. If you submit the deposits centrally, your statement will reflect two deposit transactions one for the ACH items and one for the image processed items. Likewise, if you submit deposits from each posting terminal, you will see separate deposits (for ACH and imaged items) for each scanning station. In any case, OnSite Deposit provides detailed reporting to assist you in reconciling your account. Q. Why should someone decide to use this versus electronic check processing that automatically verifies if the money is in the account at the time of processing? A. We are not aware of any services that verify funds are available in an account and that the check will be paid by the bank; most check verification services access a negative database of accounts that have been closed, have had excessive returns, or have other negative history associated with them. Check guarantee services generally guarantee, for a cost, that a check will be honored by the service if it is returned. For many businesses, the cost of a check guarantee service exceeds the businesses actual check losses. We plan to enhance OnSite Deposit in the future to support automated access to negative databases for check screening.