Electronic Check Clearing Law, 5776–2016

 

In recent years we have witnessed tremendous technological development, the development covers all of the areas of our life. The development of innovative technologies provides a range of distinct advantages, including reduction of transaction costs, payment services, documentation and monitoring of transactions made using digitally payment, and ease of use to the customer - payer and payee - and its availability to the customer. Over the years, the railway technology only increases its pace of technological advancement and enables that same time it increases the demand to create a more comfortable living environment, faster and more accessible.
As part of the work of the Department of Payment and Settlement Systems of the Bank of Israel in encouraging innovation development of means of payment and payment systems - we combined the advanced technology today in the process of clearing checks, through legislative changes and technological developments. The new process will allow the entire banking sector to offer their customers check deposit services, by technological means more advanced and cheaper costs.
Bank of Israel accompanied the process of technological revolution in the field of means of payment in Israel, while understanding the importance of regulation in order to ensure the realization of benefits them and minimize the risks along the way, all the while maintaining the stability and professionalism of the banking system.
The Electronic Check Clearing Law, which was passed by the Knesset in February 2016, enables the transition from physical check clearing to electronic clearing.  In the existing process, each check must be physically sent from the bank where payment is being collected to the bank on which the check is drawn in order to complete the clearing process.
The Electronic Check Clearing Law has very significant ramifications on the clearing process.  The physical checks will be stopped (truncated) at the bank where the check is presented for payment, where the checks will be photographed, and image files of the checks will be sent to the paying bank.  The physical checks will no longer need to be kept for years as they are today.
The law will be implemented in two main stages. The first stage, which begins today, makes interbank clearance of checks possible for checks deposited through the mobile application.  (Until now, it has been possible to deposit checks via the application only if they are drawn on the same bank.) This services is provided by most banks[1].  Mobile deposit will be enabled for checks labeled “To the beneficiary only” and up to NIS 10,000 per individual check.
This process makes it possible for bank customers to deposit checks without physically coming to the branch, and to increase the use of advanced electronic services, through the banking applications offered to them. Mobile deposit of checks also reduces the cost of depositing a check by up to 75 percent (cost of depositing a check through a customer-executed transaction compared with through a teller-executed transaction).


[1] Bank Hapoalim, Bank Leumi, Arab-Israel Bank, Israel Discount Bank, Mercantile Discount Bank, Bank Mizrahi-Tefahot, First International, Otzar Hahayal, Massad, UBank, Poalei Agudat Yisrael (PAGI).