Several readers contacted me yesterday with this piece of good news. After months of promising its customers to launch the new feature soon, ING Direct now offers remote check deposit. The delay was likely caused by the efforts that resulted in Capital One purchasing ING Direct USA. Previously, in order to deposit a check into an ING Direct savings or “Electric Orange” checking account, you would have needed to mail the check to a deposit address, deposit the check in a local bank branch and transfer the money to ING Direct later, or find an ATM that allowed deposits to the online bank.

Although paper checks are heading towards obsolescence and electronic person-to-person transactions are becoming more mainstream, some people still find paper checks convenient. For self-employed individuals and business owners, checks from clients are still a very common way of doing business.

Remote check deposit, where you do not need to visit a bank to deposit a check or send it through the mail and wait, is made possible by the “Check 21″ law. With the advancement of technology, an image of a check is just as legitimate as the check itself. In the last decade, banks have been providing scanners to business customers to securely scan and email check images for deposit.

This was an expensive proposition. In recent years, the process has improved, thanks again to technology. The cameras on cell phones now have enough resolution for these purposes. Rather than sending its customers large pieces of hardware, banks offer mobile phone applications — often for both iOS and Android — that use the phone’s camera and a secure internet connection to make remote deposit as easy as snapping a photograph or two.

How ING Direct’s remote deposit “CheckMate” works

I wanted to try ING Direct’s remote deposit service, but without a check written to my personal account handy, I wrote myself a check for $10, withdrawing from my local Wells Fargo account. I downloaded the ING Direct app for my Android phone and configured my account. As expected, I needed my customer number, PIN, answers to several security questions, and recognition of my secret image, similar configuring online access on a new computer.

Once logged in, “Deposit” was an option at the top of the screen, alongside my account overview and transfers. To initiate remote deposit, the software required me to read and accept the CheckMate terms and conditions. The terms included a warning that deposits will be held by the bank for up to 5 business days. This is typical for check deposits to ING Direct, so it’s not completely unexpected. It is unfortunate, as even check deposits are often considered electronic transactions. The hold doesn’t apply to payroll checks or checks from the U.S. Treasury like federal tax refunds.

Check deposits using the ING Direct software are limited to $3,000 per check. Compared with Chase Bank’s $500 limit, this is an improvement, but could still make the service useless for some customers.

Once I agreed to the terms, the software prompted me to take a photograph of first the front of the check then the back of the check. It was difficult to focus on the back of the check, so I tried twice, changing the lighting environment to try to get a photograph that was more precise and included a legible copy of my signature.

After confirming both photographs, I entered the amount of the check and selected the account in which I wanted the $10 deposited. At the end of the process, I tapped the button to deposit the check and received this response:

All done. Your deposit will be available April 30. Hang on to your check until you get an email saying it posted. Then, void it.

ING Direct did send an email notification to say that my submission was successful, but this notification did not indicate that the funds were posted. For this, I’ll need to wait for a later email. I’ll update this article once I receive the email to indicate how long it takes to post $10. I checked my account online immediately after completing the deposit, and this appeared in my transaction history:

Notice how the total “Amount” is zero; the $10 is not available for me to use yet.

How to deposit checks without a cameraphone

The above process depends on having a mobile device with a camera and an internet connection. Not everyone has a smartphone or web-enabled, camera-equipped tablet. I didn’t see it at first, but ING Direct provides an option to remotely deposit checks without a camera. After you endorse your check for deposit, take a photograph using a digital camera of the front and back of your check. You could also use a scanner. Save the front and back as two separate JPG images. Access your account online, and click on “Image Upload” under the “Transfers & Deposits” heading. The website will take you through a process similar to the above.

Overall, whether using a mobile phone or your computer, depositing a check with ING Direct is now a simple and convenient process. If receiving checks is still a part of your life, and you’re looking for a way to exclude high-cost local banks from your personal finance system in favor of online banks like ING Direct, remote deposit is a necessity. ING Direct has made good on their promise to offer this service to their users.

Hat tip to Daniel from Sweating the Big Stuff and many others, including the bank itself, who brought the news to my attention.

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Just when you thought it was safe, Bank of America and other large, national banks, are still finding ways to charge customers new fees. Only a few months ago, word of a new $5 monthly fee for debit card users sent Bank of America customers into a frenzy, threatening to move money away from the financial giant. Bank Transfer Day was largely a success, despite the complicated process of switching banks in today’s automated banking environment.

Hundreds of thousands of customers enrolled in credit unions, smaller organizations that are generally more consumer- and community-friendly than national institutions. Fees like Bank of America’s $5 debit card fee hit mainstream news outlets, bringing personal finance into the consciousness of the public once again. Bank of America eventually dropped its proposal for the new fee, but the bank didn’t stop looking for more methods of extracting funds out of its customers.

For the last generation, customers have grown accustomed to free or mostly-free checking and savings. These are considered deposit accounts. Depositing your money with a bank is more beneficial for the bank than for the customer. Doing business with a bank does the company a favor. The institutions should be paying customers for the banks’ benefit of holding the customers’ money. Sometimes banks do pay consumers, through interest on savings accounts, which as most people know have been at pathetic rates for the last few years.

With money on deposit, banks can go out and offer loans to businesses and individuals, earning money on the interest charged on those loans. That’s where banks should make money from their customers. Savings and checking customers are doing banks a favor.

Lately, the problem has been that banks aren’t making as much money from lending as they had previously, and shareholders demand consistently growing profits. That pressure results in even more fees. And banks are now counting on the fact that last year’s outrage has subsided, and the public is now willing to live with the idea that basic banking is not free. Additionally, it’s fair to say that the cost for a bank to manage checking and savings accounts may have increased, due to research and development into technology to provide all the banking conveniences (online access, mobile apps, person-to-person payments, etc.) that consumers have come to expect, although one could argue the lowered reliance on tellers and live customer services representatives should offset that cost.

Furthermore, the latest round of fees are designed to hurt lower income households more than those with higher net worth amounts. It’s been true in investing for a while that the better rates and lower fees are available to those with higher balances. This is due to the attempt to convince customers to invest as much money as possible with any one particular institution or brokerage. The same is true with fees; the more money you have, the more leverage you have to demand lower costs for the services you buy.

This leaves low-income families in a tough spot. If you can’t maintain a minimum balance in your checking account, a monthly fee will reduce that low balance even further, possibly even below zero, so you end up owing money to the bank or the bank decides to close your account. While the balance minimums encourage customers to leave more of their money with one institution, not all customers have more money to deposit.

Here are a few recent examples of how the latest round of new fees from big banks penalize those without the means to deposit more.

• Some Wells Fargo customers have been subject to a new $15 monthly fee if unable to maintain a $7,500 balance. And they’ve recently changed policies to prevent customers from suing the bank or being part of a class-action lawsuit.
• Citibank increased its minimum balance to avoid a $20 monthly fee from $6,000 to $15,000.
• Bank of America is testing new monthly fees of $6 to $25 in three states (Arizona, Georgia and Massachusetts).

At the same time, an informal poll of fans of Consumerism Commentary on Facebook and followers on Twitter indicates most engaged Consumerism Commentary readers, who generally earn more than the average internet user according to basic demographic research, pay nothing for their checking account, though some are still subject to a minimum balance or enrolling in direct deposit to avoid a fee. Finding free checking is still possible, especially with credit unions, but non-students still need to occasionally jump through hoops with major banks.

New regulations are often cited by the financial industry as the trigger for punishing low-income customers for handing their money to banks for safekeeping and lending. Others see these new fees as a way for banks to increase profits while using regulation as a convenient scapegoat. Of course, opinions on the matter are generally divided along political party lines as well as between industry lobbyists and consumer advocacy groups.

Low-income families might continue to avoid the banking industry, which may be the unstated goal of financial institutions in the first place. Unfortunately, that leaves little choice for low socio-economic status communities other than turning to non-bank financial products, like expensive payday loans and check cashing services. Not only do these communities need better financial role models (education alone will never solve the financial literacy problem), but they need to be guided toward better products and services.

There’s a real market opportunity for better products and services, for smart entrepreneurs who are looking to make a difference. In the mean time, here’s how to close your Bank of America savings or checking account when walking into the branch won’t work for you.

Photo: MoneyBlogNewz
KVAL / AP

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