What is a Remotely Created Check (RCC) and How Does It Work?

If you run a business that takes payments over the phone, you’ve likely faced the classic dilemma: wait for a check in the mail or pay high fees for a credit card transaction. But what if there was a third option? One that combines the speed of a digital payment with the low cost of a traditional check?

Enter the Remotely Created Check (RCC), also known as a check-by-phone or demand draft. This powerful payment tool allows businesses to create and print a valid, legal check on behalf of a customer using information provided over the phone, by fax, or by email.

It’s a game-changer for any business that needs to collect payments quickly and affordably. In this guide, we’ll break down exactly what an RCC is, how it works, and why it’s a secure and efficient tool for your business.

!What is a Remotely Created Check (RCC)?

How Does a Remotely Created Check Work?

The process is surprisingly simple and can be broken down into four key steps:

Authorization: The process begins with customer consent. The customer gives you their explicit permission to create a check on their behalf. This is typically done over the phone, where they provide their bank account number and routing number. It is crucial to record this authorization for your records.

Creation: Using software like CHAX, you enter the customer’s checking account information, the payment amount, and any other required details. The software uses this information to generate a digital draft of a standard check.

Printing: Once the check is created in the software, you print it using your own office printer. To be compliant with banking regulations, the check must be printed on blank check stock with MICR (Magnetic Ink Character Recognition) toner. This special ink allows the check to be processed by the automated systems used by banks.

Deposit: The printed RCC is now a legally valid check. You can deposit it at your bank, through an ATM, or using your bank’s mobile deposit app—just like any other check you receive. The funds are typically available according to your bank’s standard check-clearing schedule, with no extra holding periods.

Are Remotely Created Checks Legal and Safe?

Absolutely. RCCs are a well-established and legally recognized payment method in the United States, governed by the Uniform Commercial Code (UCC) and federal regulations like the FTC’s Telemarketing Sales Rule [1].

The key to their legality is proper authorization. As long as you have documented proof that the customer authorized the transaction, the check is as valid as one they signed themselves. This is why it is a best practice to record the verbal authorization call or follow up with a written confirmation.

From a security standpoint, RCCs can be more secure than traditional mailed checks. Because the check is created and printed in your office, it never enters the mail system, eliminating the risk of mail theft and check washing fraud.

The Key Advantages of Using RCCs

For businesses, the benefits of using remotely created checks are significant:

• Get Paid Faster: No more waiting days or weeks for a check to arrive in the mail. You can receive payment authorization, print the check, and deposit it on the same day.
• Reduce Costs: RCCs allow you to avoid the high percentage-based fees associated with credit card payments, which can save you thousands of dollars, especially on large or recurring transactions.
• Improve Cash Flow: Faster deposits mean improved cash flow, giving you the working capital you need to run your business smoothly.
• Increase Sales: By offering a convenient payment option for customers who don’t have or prefer not to use a credit card, you can close more sales over the phone.
• Enhance Security: Eliminate the risk of lost or stolen checks in the mail.

Ready to stop waiting for payments and take control of your cash flow? Learn more about how CHAX Check-by-Phone software can make it easy to start accepting remotely created checks today.

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References

[1] Federal Trade Commission. (n.d.). Complying with the Telemarketing Sales Rule. Retrieved from https://www.ftc.gov/business-guidance/resources/complying-telemarketing-sales-rule