The
Bank of Israel is pleased to announce the completion of another significant
stage in the check settlement reform – the complete implementation of the
Electronic Check Clearing Law, which enables the conversion of a paper-based
check to a digital record that constitutes legal evidence, which can be
recalled at any time as necessary, without keeping the physical check.
Irit
Mendelson, Head of the Accounting, Payment and Settlement Systems Department at
the Bank of Israel, said,
“The accelerated technological developments that have taken place in recent
years have not left the payment systems field behind, and they make it possible
to advance the market to advanced systems that are more convenient, more
efficient and more secure. The Bank of Israel is leading the technological
revolution in the means of payment in Israel, with the understanding of the
importance of regulation, in order to ensure the actualization of the
advantages inherent in the technological improvements while minimizing risks
and maintaining the stability of the payment systems in Israel. Implementation of the Electronic Check
Clearing Law is a major component of this process.”
The
first stage of implementation of the law began in November 2016, when most
banks began carrying out interbank settlement of checks deposited through
cellphones. The service is possible for
checks marked “To the Beneficiary Only” up to NIS 10,000 per individual
check. Beginning on November 21, 2017, image
files of the physical checks deposited for payment from all banks are created by
the bank where the check is deposited, and the image files are sent to the bank
from which the customer wrote the check, without the physical checks needing to
be kept for years as was required until now.
Implementation
of the Electronic Check Clearing Law makes it possible to provide banking
services that are less expensive, innovative, more convenience and quicker for
customers. Check imaging allows the
banks to expand the service for depositing checks through the banking
application and cellphone, which is considered a customer-executed transaction,
carrying a fee that is up to 75 percent lower than for a teller-executed
transaction. Since the start of the
reform, there has been a significant increase in the use of check depositing by
cellular. In 2016, about 200,000 checks
were deposited in this way, while in 2017, by the end of October there were
about 2 million checks deposited in this way. Each year, more than 100 million
checks are being cleared.
In
addition to the changes in the deposit process, the check return process has
also changed. When a check is returned,
the customer can save the need to physically come to the branch. The customer can ask the bank,
electronically, to deposit the check again, if there is nothing to
prevent this; ask the bank for a document called an “output of a
computerized check” which will serve as a legal alternative to the check
itself; or independently print the “output of a computerized check” from
the website of the bank where the customer manages his account.
Ronit
Chitayate, Head of the Payment and Settlement Systems Division at the Bank of
Israel, and Chairman of the Bank Settlement Committee,
said, “The completion of
the implementation of the Electronic Check Clearing Law was made possible
thanks to the cooperation, professionalism and investment of the Bank Settlement
Committee members, including the Bank of Israel, the Postal Bank, and the
banking system. The law advances the
settlement of checks in Israel, bringing it to the accepted level in the
advanced world. These are significant
changes both from technological and business standpoints, as part of which the
check settlement, storage and retrieval processes are updated. This is a complex project that required
preparation on the part of the entire banking system, in order to implement
changes in their business and technological processes, all while meeting joint
timetables for all entities and beginning implementation of the law
simultaneously.
Further
details and explanations, the rules, and the output, are available on the Bank
of Israel’s website at:
http://www.boi.org.il/en/PaymentSystem/Pages/Cheque-truncation.aspx