Washington—The Pew Charitable Trusts released a report today examining mobile remote deposit capture (mRDC), a key feature of mobile banking that is gaining popularity among banks, prepaid card companies, and consumers. Pew’s analysis identified key mRDC terms and conditions and found that many are poorly disclosed or generally unavailable to prospective customers.
First introduced in 2009, mRDC allows individuals to take smartphone or tablet photos of endorsed paper checks and deposit them through an app from their bank or prepaid card company. According to survey data from the Federal Reserve, adoption of mRDC is relatively small but growing: It increased from just 2 percent of consumers in December 2011 to 11 percent in December 2013. Although mRDC is a relatively new technology, its use is expanding; it can provide greater user convenience and lower the cost of check processing for financial institutions.
The Pew report, Terms and Conditions of Mobile Remote Deposit Capture: The Disclosure Practices of Banks and Prepaid Card Companies, examines how financial institutions present mRDC products to their prospective customers.
“As smartphones become a more popular banking tool, transparency will be vital to the understanding and use of these applications,” said Susan Weinstock, who directs Pew’s consumer banking project. “Yet Pew’s review shows that many banks and prepaid card companies offering mRDC fail to market the product in a way prospective customers can clearly comprehend. If people are confused, they may not recognize all the potential functionality and benefits available, such as making deposits via smartphone as a lower-cost alternative to check-cashing stores or reloadable prepaid cards.”
For the report, Pew examined mRDC availability and policies at 50 banks and 51 prepaid card companies, identifying 10 key terms and conditions that prospective customers are likely to consider when deciding whether to use the technology. These include cost, the time before deposited funds become available, and eligibility requirements. Pew’s analysis found that:
The better informed customers are about their companies’ policies, the better they will be at managing their account balances and avoiding unnecessary fees. Providing greater transparency could be a powerful tool for providers to help build confidence in mobile banking.
The Pew Charitable Trusts is driven by the power of knowledge to solve today’s most challenging problems. Learn more at www.pewtrusts.org