These days, more and more of us are handling our money matters from our phones. Splitting a dinner tab with a friend, depositing a check, transferring funds: All you need is a mobile device, a secure internet connection, and you’re golden.
Which makes perfect sense, considering how our phones have changed the way we do, well, just about everything. You can order NYC bagels to be delivered to your doorstep the next day or send live video footage to someone across the world.
But back to banking: Mobile banking has soared in popularity in recent years. In fact, two-thirds of all banking customers are conducting their business digitally, whether via a computer or a mobile banking app.
Many mobile banking apps allow you to transfer money between accounts, pay bills, check your account balances, and make mobile deposits. The latter is a huge convenience. In years past, a person either had to turn up at a bricks-and-mortar bank branch with a check or deposit it at an ATM. Now, you can snap a couple pics of your check on your phone and voilà! Your check is deposited.
It may seem like magic, but it’s actually technology at work. It’s worthwhile to take a closer look and understand:
• What is a mobile check deposit?
• How does mobile deposit work?
• What are the pros and cons?
How Does Mobile Banking Work?
Mobile banking is a service provided by a financial institution, like a bank, that allows its customers to conduct transactions, such as checking an account balance, using a mobile device. This is somewhat different from internet banking, which generally refers to banking done on a computer or laptop.
The primary difference between internet banking and mobile banking is that mobile banking uses an app, aka software designed specifically for a mobile device. Customers using a computer would log onto an online portal to access their accounts using their internet browser.
It is possible to use a smartphone’s internet browser to log into the online portal, but a bank’s app generally provides a better and faster user experience, as it was specially designed and built to be used on a smartphone or tablet. “Mobile banking” refers specifically to the use of a bank’s app.
What Is A Mobile Check Deposit?
The latest iterations of mobile banking have made the use of mobile deposit widely available. With mobile deposit, you’re able to deposit a check into your account using your phone’s or your tablet’s camera.
Most financial institutions require that, once you’ve opened their app, you type in the amount of the check and take a photo of both the front and the back of the check. Before you do this, be sure to endorse the back of the check. Some banks may also request that the depositor write “For Mobile Deposit at [Bank] Only” or something similar.
The app generally lets you use this feature 24 hours a day, although some banks may only make a same-day deposit up until a certain hour, like 10:00 pm. Every bank will be different, but most banks will deposit a check quite late in the evening, even if they won’t allow 24 hours.
How long do mobile deposits take to clear? Deposits may show up immediately, later on the same day, or the next day. Sometimes, they’ll be fully available and sometimes partially, depending on the rules of your bank. For example, say you make a mobile deposit worth $3,000. Your bank may make $500 available immediately and the remaining $2,500 available in two business days.
Each bank is going to have its own “funds availability” policy, though there are some federal regulations on how long a bank can place a hold on a deposited check. (For example, a bank cannot place a hold on a check valued at less than $200.) A bank can always have rules that are less strict than the federal rules, and release the funds for use sooner. Again, it is always going to depend on the bank, so be sure to ask.
Some banks may have one-day or monthly dollar limits on mobile deposits (like $10,000 per month). Others may have limits on the size of checks that they are willing to cash over mobile deposit. For example, some banks will not allow customers to mobile deposit checks worth more than $5,000.
How Does Mobile Deposit Work?
How does mobile deposit work? For the customer, it’s quite simple actually. All you need to do is take a picture of your check within your financial institutions app and then the information is transmitted. It’s that easy! Convenience is a major advantage of mobile banking.
When you snap that photo, a bank or financial institution will generally produce a copy of the check as a stand-in for the physical copy. Using this facsimile, a bank will work to collect the money from the check writer’s account.
Even before the bank is able to retrieve the money from the check’s source, the money is deposited into your account. Though the technology is incredible, the money itself isn’t actually moving that fast.
That produces one of the primary problems with mobile banking — folks might spend or transfer the funds before the money has fully cleared. Unfortunately, just because you use mobile deposit to put a check into your account, and you see it credited there, that doesn’t necessarily mean the funds are yours to be used.
Think of the money you see in your bank account after you’ve done a mobile deposit as placeholder money. If the bank couldn’t obtain the funds for whatever reason and the placeholder funds don’t clear, it leaves the banking customer vulnerable to bounced checks and overdraft charges. (Those are issues you want to clear up quickly, to make sure you don’t wind up with black marks or errors on your credit report.)
After making a mobile check deposit, hold onto the physical copy of your check for two weeks in case there is a problem getting the check deposited. If you need to, mark it so you know that you’ve already deposited the check.
After a couple of weeks, when the check has cleared, you should be fine to get rid of the check. As with any document that contains private bank information, do not simply put the check into the trash or recycling, where the check could be stolen. Shred or destroy the check so that no one can obtain the information.
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The Advantages of Mobile Deposit
Now that you know how the mobile deposit process works, here’s a guide to the benefits of mobile deposits.
Save Yourself a Trip to the ATM
Having to take a trip to a bank branch or ATM to deposit a check can be a real hassle. Maybe you have a busy day, you’re home with a sick kid, or it’s pouring out: Whatever the case, it’s not always so enticing to walk or drive to a bank just to get a check deposited into your account. Thankfully, with mobile deposit, you don’t need to budge from wherever you are to get that check into your bank account. This is a huge advantage of mobile banking.
Deposits Can Be Done Later than at Bank Branches
For lots of working people, getting to the bank before it closes at 5:00 pm on a weekday is difficult to do. With mobile banking, checks can be deposited at any time of day, any day of the week. You can be in your pjs, watching a streaming series, and quickly get that money deposited. That’s a major benefit of mobile banking.
Exactly when the cash becomes available to use (and in what amount) will depend on that particular bank’s rules, but many banks have extended hours for mobile deposit. Customers can generally access at least some money, even with deposits made later in the evening or on the weekends.
Deposits Are Credited Quickly
Because of the extended hours offered by mobile deposits, it may be possible to deposit a check and see the money available in your account faster than if you had to wait until you make it to a branch location. If you deposit the check during mobile deposit hours and the amount is, say, $200 or under, it is possible to see your funds immediately.
Plus, mobile check deposits are generally quicker than ATM deposits. With ATM deposits, bank staffers have to retrieve the actual checks from the ATMs and manually digitize them. When you deposit your check via a mobile app, however, it is already digital.
You Can Deposit a Check From Anywhere
Talk about convenience! Sometimes, you’re simply not anywhere near a branch or appropriate ATM but need to deposit a check. One of mobile banking’s biggest benefits is being able to deposit a check from anywhere in the world.
Let’s say you are heading out for a week-long family reunion, and you grab your mail as you are leaving. While you’re at the airport, you discover a check you’d been waiting for has arrived. No worries! You can deposit it from wherever you are (well, maybe not in-flight while at 30,000 feet) while you travel.
Deposits Are Secure
Worried about security? Many people are these days, as hackers and scammers seem to be multiplying. Here are the facts: Depositing your checks through your mobile app is as secure as any other digital banking process. Most banks and credit unions use enhanced security processes and encryption to protect their customers. Also, if you are worried that your phone might be stolen and the image of your check could potentially fall into the wrong hands, don’t. The image of a check that is deposited via mobile banking isn’t stored on your phone.
A Few Downsides
Now that you’ve heard about the benefits of mobile banking when it comes to depositing checks, let’s acknowledge that there are also a few downsides. A couple to consider:
• If you want to cash your check and get those bills in hand, you will not be able to do so via mobile deposit. The funds must go into your account.
• Your mobile deposit might wind up “bouncing.” Don’t assume that just because it’s deposited, you can go and spend it.
• There are mobile deposit frauds that occur, often in which a person or organization you don’t know well sends you a check and asks for you to deposit it and then send a portion back to them. Keep your guard up!
• Yes, security issues can occasionally crop up with mobile banking, so remember to protect your passwords and PINs; always do banking on private WiFi; and enable two-factor authentication for apps that move your money. Check your bank account often, too, to see if there is any suspicious activity.
Many banks offer you the convenience of mobile deposits, which allow you to deposit a check from virtually anywhere at any time, using an app. There are many advantages to mobile banking in this way. It can save you time and energy versus taking a check in person to a bricks-and-mortar branch or an ATM. Though there are a few downsides to the process, mobile deposit is an innovative financial tool that can make banking that much more seamless.
While we’re on the subject of banking better, check out what SoFi offers. Our mobile banking app allows you to spend and save in one place, and we think you’ll like the way your money grows. When you sign up with direct deposit, you’ll earn a competitive APY, and you’ll keep more of your money, too, because we don’t charge you monthly, minimum-balance, or overdraft fees.
SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..
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