Is Depositing Checks on Your iPhone a Good Idea?

Have you seen the new PayPal app? It comes with an awesome new feature that allows you to deposit checks.

Today we’ll go over how the new feature works along with whether or not users are using the new feature and finish off with a discussion of whether or not the feature should even exist.

Skipping the Bank

Ever since the day that I made my first online transaction, I knew that the future of the banking industry had changed. For years we’ve all been taking dramatic steps towards cutting a weekly trip to the bank out of our lives for good.

For instance, in many parts of the US, including where I live, it’s entirely possible and in fact quite common to live a fairly cash-less lifestyle. Whether I’m buying a $1,500 sofa or a 79ยข Coke, I simply whip out my debit card. It might seem absurd to some, but I simply don’t see the point in carrying around pockets full of jingling change.

As time goes on, the reasons for me to go to carry cash are rapidly disappearing. Every business I know of accepts plastic and even cases that call for pooling money amongst friends can be handled with a quick mobile phone PayPal Bump or Venmo transaction (admittedly, few of my friends go for this at the moment but they’ll come around).

I’ve found that as my need for physical cash reduces, so do my necessary trips to the bank. I can check my balance and manage my accounts from my living room, so why make the drive? In fact, there is literally only one reason that I ever go to the bank anymore: to deposit a check.

For years I’ve been complaining about how this whole check-depositing business is cramping my bank-less lifestyle and could easily be replaced with an online service and a scanner. It seems I’ve finally got my wish.

PayPal Check Depositing

The newest version of PayPal for iPhone allows you to deposit checks from anywhere. You simply use your iPhone’s camera to photograph the front and back of the check and PayPal will process the transaction and add the money to your account in a few days.


PayPal's new features being touted on their website

PayPal may not be the only company to release this feature, but they’re definitely one of the most significant entries into the market yet. USA Today and others are reporting that upwards of $100,000 was deposited into user accounts via this new feature in the first 36 hours!

However, despite all the buzz and the obvious success, I can’t help but wonder about how this will turn out in the long run.

A New Era of Check Fraud?

I understand that the good folks at PayPal are smart, a lot smarter than me in fact. Even still, I can’t help but wonder if they’ve really considered the door they’re opening up to the less-than-trustworthy members of society.

Check fraud is something that banks have struggled with for years despite being able to actually hold and examine checks that are deposited, how is this not going to be an even bigger issue when all they have to examine is a photograph!?

Again, I’m sure they’ve given this no small amount of thought but I can’t find any information on just how these virtual check-cashing companies are preventing tomorrow’s Frank Abagnales from taking advantage of the system.

After some digging, I discovered that PayPal uses a company called BankServ to handle the new digital check transactions. BankServ uses a system called DepositNow!, which lists lots of information on their site about how safe their servers are but nothing about how blurry iPhone photos won’t lead to fake check deposits.

What Do You Think?

How much do you trust online transactions? I do business on the web every day but still know plenty of people that refuse to spend a single cent online for fear of identity theft. As online check depositing becomes more popular, do you think it’ll be a new potential way for someone to steal your money or is this actually going to somehow make us safer from check fraud?

Leave a comment below with your opinion (especially if you’re in banking and understand how it all works). As for me, despite my concerns, I’m thrilled with the possibility of now being able to abandon trips to the bank altogether!