The arrival of updated federal legislation this year will allow for more modern kinds of digital payments in Canada and "photo chequing" is said to be on its way to Canadian banks after successfully debuting stateside.
The service could prove to be the next step for consumers to hop aboard mobile banking and rumour has it Canadian banks are racing to be the first to implement it.
Racing they may be but no institution can roll out this service until the Canadian Payments Association (CPA) releases a regulatory framework, scheduled to come out before the end of 2012, that will enable cheque replacement documents.
This will allow financial institutions to offer these services, ultimately clearing the way for the digital transmission of a cheque and eliminating the need for the physical exchange of paper.
Presently, the CPA processes an estimated two million cheques per day.
"This is a part of our broader portfolio that allows cheque images to be processed electronically as opposed to having to process paper cheques," remarks Steve Nogalo, vice-president of global payments at NCR Corp. in Waterloo, Ont., the company behind the technology. "Photo chequing provides the ability to do that from a home scanner or an ATM or a place of business. In the case of the mobile photo capture, it's using the camera on one's smartphone."
How does photo chequing work?
Once a consumer captures an image of both sides of a cheque, the NCR APTRA Passport technology submits the deposit with a financial institution's back office for processing. The solution is designed for consumers or small services-based businesses that need to process cheques while on the run.
"It compares the amount of the cheque using sophisticated image recognition technology to validate that the amount that the consumer has entered in fact matches what has been printed on a cheque," he explains. "It also does numerous fraud checks to ensure the cheque hasn't been processed previously."
For financial institutions there are two distinct perks:
cost and errors associated with handling paper cheques.
Though he wouldn't name names, Nogalo says he's had discussions with a number of Canadian banks and adds they are interested in providing the service. Attempts to contact a spokesperson from Canada's big six banks about photo chequing were unsuccessful.
"Mobile banking has been a tremendous success in Canada. In fact, it has one of the highest uptakes in any country," he says. "(Photo chequing) is a logical extension of what services are available today through mobile banking platforms."
Hidden fees for photo chequing?
All fine and good but what bank fees can willing consumers expect to pay? Apparently the Bank of America hasn't been forthcoming with its fee disclosure for the service.
Warren Shiau, director of research, technology and consumer insight, Leger Marketing in Toronto, says he expects the service to be a hit when it does debut in Canada.
"In the States this is proving to be a hit for two reasons: convenience and cost savings," he says. "It lets consumers use a smartphone as the deposit mechanism for something (cheques) that has always relied on actually going and making a deposit. In the smartphone age, you can see the appeal this has."
On the cost savings side it reduces human processing time; that's why the banks are so keen on it but Shiau isn't convinced financial institutions here will charge consumers for it, at least initially.
"There may not be extra fees associated with it, but the banks would love to have mass adoption of this service."