Checks are to get a modern overhaul beginning this week, as a new electronic deposit law comes into effect. The law allows customers to take photos of checks with their smartphones and, via a banking app, deposit the checks into their account electronically. The conversion of a physical check into an electronic one renders the former useless, and once the money is deposited electronically, the physical check can be discarded or kept for the customer’s records.
Until now, most checks could be deposited or cashed only if they were physically presented at a bank or put into an overnight banking slot at a bank branch. Apps to allow electronic deposits of checks have actually been around for the past two years, but until now the law allowed customers only to deposit checks from accounts in the same bank. The new law will allow customers to electronically deposit any check.
In the event that a check is not accepted for deposit due to a lack of funds, the app will indicate that there is a problem – but that message will be sent in a matter of minutes, instead of the week or so that it currently takes banks to inform customers that a physically-deposited check has been rejected, thus saving everyone time and effort. The one limitation on the law will be that it will apply only to checks for the sum of NIS 10,000 or less.
Despite the old-fashioned image checks have, they are still the dominant form of payments in Israel. In 2015, 138 million checks worth NIS 1.02 trillion passed through the bank accounts of Israelis, while credit cards payments amounted to NIS 260 billion. Withdrawals from ATMs and bank tellers amounted to NIS 245 billion.