The Electronic Check Clearing Law (2016) came into effect today and, at least as far as the Bank of Israel is concerned, this is big news for the Israeli market.
The law, passed in the Knesset last February, enables electronic check clearing, in addition to physical clearing. Until now, the clearing process required the payee to physically deposit the check at the teller or the ATM in the bank, using an envelope or in a direct deposit to the bank account using a credit card.
From now on, customers will not be required to visit the bank for this. They can download the necessary application, scan the check and deposit it in the bank at any time and from any place. Moreover, there will be no reason to keep checks for years, as done until now, since the physical check will stop at the bank in which it is deposited, where it will be photocopied, and copies will be sent to the bank from which the sum is withdrawn.
The law will be implemented in two main stages. In the first stage, which starts today, it will be possible to clear checks between most banks using the mobile phone; until now, this was only possible in transactions between different accounts in the same bank. The banks which enable this new clearing method are: Bank Hapoalim (TASE: POLI), Bank Leumi (TASE: LUMI) , Arab Israel Bank, Israel Discount Bank (TASE: DSCT), Mercantile Discount Bank, Mizrahi Tefahot Bank (TASE:MZTF), First International Bank of Israel (TASE: FTIN), Bank Otsar Ha-Hayal, Bank Massad, U-Bank and Bank Pagi.
Deposits will be possible only for checks marked 'payable to payee only' and the maximum check sum will be limited to NIS 10,000. Fees for check deposits will also be reduced by 75%, compared with the fees for direct deposit via a teller.
In addition to changes in the deposit process, changes will also be made in checks that cannot be honored. As mentioned, in this new process the check will actually be turned into an image. Therefore, when the check is returned to the client, two options will be proposed: the client could request the bank to attempt to deposit the check again, or to receive a 'computerized check printout' which contains an image of the check and the reason it has bounced; After the printout is generated, the client will not be able to deposit the check again or pass it to a third party. This printout could be used to continue collection efforts via the Bailiff Office. In legal terms, the printout will be admissible evidence to the correctness of its contents in any legal proceeding.
The next stage in the implementation of law is planned for 2018. Starting on this date, checks deposited using other means, as well as checks in shekels of all Israeli banks, will be displayed for electronic collection.
Published by Globes [online], Israel business news - www.globes-online.com - on November 8, 2016
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