First faxes, now e-check; Knesset paves way for cashing checks electronically

Customers will now be able too cash checks using their smart phones instead of going to deposit them in bank branches, and the funds will be quicker to clear.

By NIV ELIS
Updated: FEBRUARY 2, 2016 17:48
money (photo credit: REUTERS)
money
(photo credit: REUTERS)
2016 is shaping up to be a good year for Israelis frustrated with the country's deep-rooted inconveniences, most prominent in the government and banking sectors.
In January, the cabinet approved a policy requiring government agencies to accept documents by e-mail, finally forcing a modern alternative to the frequently required faxes.
On Monday night, the Knesset passed a Bank of Israel-approved law that will create an electronic clearance system for checks. The implication: customers will be able too cash checks using their smart phones instead of going to deposit them in bank branches, and the funds will be quicker to clear.
"The electronic clearance law will significantly advance the payments market in general, and the process of clearing checks in particular," said Bank of Israel Governor Karnit Flug. "The law is another step toward adopting the positive influences of technology, and its implementation will benefit bank customers who can benefit from improved more advances, convenient and cheaper clearing," she added.
Though banks such as HaPoalim and Leumi offered services for cashing checks electronically, they were limited to those issued by their own banks. The new clearinghouse will allow all banks to clear checks from any other Israeli bank. It is expected to reduce the transaction costs for cashing checks by 75%.
Those benefits will not be immediate. The new clearinghouse will only have to be up and running in six months, and the banks will have an additional 18-month period during which they can still clear checks physically. After that period of time--which will extend into February of 2018--all check clearances will have to be electronic.
The Bank of Israel has taken steps in recent years to improve customer banking experiences, including out regulation for opening bank accounts online and mandating simple, inexpensive basic banking tracks.
The government is also working more broadly to adopt measures to increase efficiency, including a program in the Office of the Chief Scientist offering grants to tech that is applicable in the public sector.


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