Remote deposits became legal in the
United States in 2004 when the
Check Clearing for the 21st Century Act (or
Check 21 Act) went into effect. The Act is intended in part to keep the country's financial services operational in the event of a catastrophe that could make rapid long-distance transportation impossible, like the
September 11, 2001, attacks. The Check 21 Act makes the digital image of a check legally acceptable for payment purposes, just like a traditional paper check. Before 2004, if someone deposited a check in an account with one bank, the banks would have to
physically exchange the paper check to the bank on which the check is drawn before the money would be credited to the account in the deposit bank. Under Check 21, the deposit bank can simply send an image of the check to the drawing bank. This reduction of the transportation time from total processing life cycle of a check provides a longer time for the corporation to process the checks, allowing for later deposits and faster check clearance. Initially remote deposit capture (RDC) was used primarily by businesses. Check scanners were priced between $250 and $2,500 and were either purchased by the business or rented from the bank. These businesses were also often required to pay monthly fees or maintain a minimum account balance to reduce the risk of fraud. Businesses were screened by the bank to determine the risk of fraudulent checks and bounced checks, and they were audited by the bank to ensure proper check handling and disposal. On July 4, 2009, Element Federal Credit Union (formerly WV United FCU)) became the first financial institution to deploy a smartphone app for mobile check deposit.
USAA closely followed the launch of a mobile application in collaboration with Mitek Systems in August 2009. Several other banks began accepting mobile deposits in the early 2010s as the technology became more popular. Mobile Deposit allows smart phone users to snap a picture of the check with the phone's camera. The application automatically processes the picture and sends it to the bank for deposit. The customer does not mail in the original check, instead voiding or discarding it. In 2013 the
United Kingdom government proposed a similar digital cheque imaging law allowing mobile cheque deposit, which was put into place in 2014. In 2020
Wells Fargo bank was ordered to pay $102.8 million in damages to USAA for infringing on mobile check deposit patents developed in 2008. == Use ==