Remotely Created Checks

A remotely created check (RCC), also known as a Pre-authorized Draft, Demand Draft or a Check 21 Demand Draft is a payment order created by the payee and authorized by the customer remotely, using a telephone or the internet by providing the required information including the MICR code from a valid check.

rcc

Remotely Created Checks do not bear customer signatures like ordinary checks. Instead, they bear a legend statement "Authorized by Depositor". This type of instrument is usually used by credit card companies, utility companies, or telemarketers

A Remotely Created Check IS a Check

RCCs must conform to standard check layout and design standards and regulations.  The MICR line must be encoded using magnetic ink in the E13B font formatted in compliance with applicable ANSI standard the same as a standard check.  Failure to adhere to these rules that will cause most rejections by the depositing institution

Remotely Created Check Liability

Normal check liability for payment resides with the payor institution.  However, in the case of RCCs, check liability for payment resides with the bank of first deposit (BOFD) since the RCC was produced by the payee.

Know Your Customer (KYC)

Because liability for payment resides with the BOFD, it is important that institutions accepting RCCs follow the Fed’s KYC guidelines to;

  • Determine the identity of each customer,
  • Develop a profile of its customers typical account transactions
  • Know the origin of RCC funds
  • Monitor for deviations from the established profile

External Processing Code (EPC) and Remotely Created Checks

Beginning November 24, 2015, banks accepting RCC items for deposit may begin to require conformance with the X9 Standard X9.100-160-2014 Part 2.

https://x9.org/x9news/external-processing-code-epc-remotely-created-checks-rcc

The standard defines a new usage for the External Processing Code.  A setting of 6 for this field and MICR line character is now used to identify a check item as a Remotely Created Check (RCC).

RCC Check showing EPC set to 6

 

The EPC is a MICR digit that conveys special information regarding the correct handling or routing of a check or check data to financial institutions and other processors.  It is also a coresponding data field in ICL files (Record 25, field 3).

All My Papers Products; X9 Viewer and X9 RCC support the use of the EPC to identify a check item as an RCC.

Remotely Created Checks and Check 21

The technology of Check 21 enables the creation of an ICL file from the RCC images without an actual paper document ever being printed.  However, while this is technically possible, REG CC from the Federal Reserve Board says that all checks must start as paper. With All My Papers X9 RCC software, RCC Checks can be printed immediately, scanned and then input into All My Checks as required by the depository institution.

For more information about All My Papers' X9 RCC product, go to the X9 RCC Product Page

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