As a provider of RCC type of eChecks, also known as, Remotely Created eChecks, we do not clear your customers check in our Bank Account like ACH Processors. We deposit your transactions into your own deposit account. This means the checks are in your account faster, but that does not mean the funds are “available” yet.
Your Deposit Bank has a Funds Availability Policy. Their policy determines when the funds of a deposited check can be accessed by you. Sometimes the funds are held for up to 5 days. Just because you deposit a Check for $5000 does not mean you can take out $5000 in cash immediately. Nor does it mean that you can write a check against that amount and your bank will cover it. The decision to Hold funds is determined solely and exclusively by YOUR bank.
All In-Network Banks accept Remotely Created Checks. The fact that the deposit is a RCC, does not affect whether the Funds will be held or not. Your RCC Deposit is received by your Bank like any other physical check.
WHY WOULD MY BANK HOLD MY FUNDS?
Each and every bank creates their own Policy. Their policies can be affected by the balance in the Merchant’s account, how long the account has been established and what percentage of NSF Checks have been deposited in the past.
To state the obvious, if you have a balance in your bank account of $100 and you deposit a check for $5000, the bank will obviously hold that check until the check clears ... typically 4 days. Why? Because your bank wants to protect themselves in case the $5000 check is returned due to Insufficient Funds.
Now let’s reverse it… let’s say you have a balance of $5000 in your bank account and you deposit a check for $100. The bank generally will not place a Hold on that $100 check since the Bank is protected, by the balance in your account, if that check is returned.
Sometimes, newer accounts (accounts less than 60 days old) may have their checks held at a higher percentage. For example, some banks place Holds on every deposited check for the first 30 days for some merchants. It varies by Merchant and by Bank.
Percentage of NSF Checks
In general, Banks understand that not all deposited checks are “good”. They have developed a history of merchants in your industry and created their guidelines of acceptable levels. Some banks will close your account if more than 15% of your transactions end up in NSF status. Some banks are more conservative, some less conservative but they all have a policy.
How Checks are Deposited
If you use the Mobile Deposit service on your Bank’s Mobile App, those checks will always be held for at least one additional day. Some funds availability delays occur when you use after-hours banking, ATM Deposits or in-person Saturday deposits.
Yes, there are laws that dictate when a Bank must make funds available or what percentage of the deposit should be made available. See US Commercial Code, Code of Federal Regulations, Title 12, Chapter II, Subchapter A, Part 229 “Availability of funds and Collection of Checks (Regulation CC). Unfortunately, there is built in language that protect the Banks such as, “According to banking regulations, reasonable periods of time include an extension of up to five business days for most checks. Under certain circumstances, the bank may be able to impose a longer hold if it can establish that the longer hold time is reasonable.” Of course, they always can justify whatever they want.
WHY WOULD MY BANK CLOSE MY ACCOUNT?
Banks always have the option of closing your deposit account. Why would they do this? To protect themselves from potential losses, of course! Here are some reasons:
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