Photo chequing in Canada: The big picture

All I usually want is to take out 20 bucks, but for some reason I constantly end up standing in line at an ATM behind someone who has a whole series of complicated transactions to make. If the bank’s security cameras are watching, the scowl on my face would not be a pretty picture.

A prettier picture, at least from a financial perspective, is one where consumers with deposits to make can avoid the ATM altogether (or, even more nightmarish, a bank branch) and just take a picture of a cheque with a smartphone and have it processed instantaneously. Remarkably, we are finally getting closer to this version of mobile banking in Canada than ever before.

Earlier this month the Canadian Payments Association made some changes to the rules which govern how cheques are cleared by financial institutions that could facilitate the idea of remote deposit capture, as the concept is called. It’s taken five years, but the crux of it is that, whereas banks would have had to set up bilateral agreements with each other in order to allow their customers to process cheques via smartphone photos, they now have the legal go-ahead to work collaboratively. In other words, if you’re an RBC customer and someone with a CIBC account gives you a cheque, RBC can now legally process that CIBC cheque with just a smartphone image.

“It adds more structure and more certainty to CPA members who choose to participate,” said Vladimir Shatiryan, a lawyer with Blake Cassels & Graydon LLP in Toronto. “It’s up to the direct clearers to decide whether they want to participate and offer the option or the feature to their clients.”

Last month, ING Direct Canada entered the fray by adding feature called Cheque-In to its existing mobile app across all major mobile platforms. The bank’s chief information officer, Charaka Kithulegoda, told me that so far customers are using remote deposit capture to handle anything from a few hundred dollars to thousands of dollars. And although it may take some time to educate the market on the availability of this kind of banking, early adopters like the fact they get an e-mail alert confirming a deposit’s been made.

“From a customer standpoint, there is greater security,” he said, adding that the main challenge may be keeping up with increased demands and expectations. For instance, photo chequing is convenient but hold periods will still apply. Just because it’s mobile doesn’t mean the back-end bureaucracy goes away.

With the legal issues out of the way, the onus will now be on all Canadian banks to jump on board and create the infrastructure and apps that allow remote deposit capture. Although some of the bigger ones offer it through their U.S. branches, I suspect the rollout here will be as slow as everything else associated with mobile banking in Canada. Financial institutions here have been sluggish to facilitate payments via smartphones and apps, even though you could argue it would improve customer service. In this case, it could actually get money into the banks faster. If they still can’t wrap their heads around the business case, let me put it this way: one day soon a picture taken on a smartphone may be worth 1,000 tellers.