Pew Report Critical of Mobile Remote Deposit Capture

Mobile remote deposit capture (mRDC) is gaining traction with consumers, banks and prepaid card issuers, but a report issued earlier this month The Pew Charitable Trusts asserts that more transparency is needed to give consumers more confidence that the service is worth using.

“Many providers of mRDC fail to market it in a way that prospective consumers can clearly understand. A more transparent marketplace would build consumers’ confidence in mRDC and the other beneficial features of mobile banking,” the report said.

Among the key findings that came after examining mRDC availability and terms for 50 banks and 51 prepaid card companies are: Banks are more likely to offer mRDC than prepaid card companies (37 major banks vs. 21 prepaid card companies); Terms and conditions are available online but not as often available on the mobile banking app customers actually use; Most companies don’t disclose all terms and conditions, including fees; Half of the banks studied do not disclose fund-availability policies but all prepaid card companies do; Most companies don’t properly disclose statuses of mRDC deposits and if they are accepted or rejected.

Though the report suggests more research is needed, it outlined 10 key terms and conditions that FIs that offer the service should consider when defining policies for customers.

These include examining: sign-up requirements, costs, deposit limits, posting policies, funds-availability policies, regulation CC, approval alerts, rejection alerts, hold alerts and check-retention requirements. Pew also concluded that these terms of mRDC products are “poorly disclosed or basic features, such as notifications regarding the status of deposited funds, appear to be generally unavailable.”

Pew’s findings that consumers are reluctant to use the service seems at odds with data from The Federal Reserve, which reported the percentage of consumers using mRDC is low, but growing rapidly. The number of users has increased from 2 percent in December 2011 to 11 percent in December 2013 (mRDC was introduced in 2009). Another survey published in February 2013 from the Federal Reserve concluded that one in four consumers used the service within a 90-day period of the survey and nearly half of those surveyed had used the technology.

To download Pew’s Report, click here.