Questions and Answers
Question: What is the Electronic Check Clearing Law, 5776–2016, and
how does it help me?
Answer: This is a new process that will enable a transition from physical
clearing of checks to electronic clearance by stopping checks at the
presenting bank (the collecting bank) and sending image files of the checks
to the paying bank, as an alternative to physically shipping the check from
the presenting bank where it was deposited to the bank from which the
money is withdrawn. This process is also called check truncation, since the
check is truncated at the presenting bank, or a check imaging process, since
the presenting bank creates an image (picture) file of the physical check.
Thanks to the Electronic Check Clearing Law, 5776–2016, cheaper, more
innovative and more intuitive banking services can be provided for
customers, and the customer can deposit a check without needing to come to
the branch, by depositing it through the banking application.
Question: Why was the check truncation / check imaging process
created?
Answer: The 138 million checks deposited in Israel in 2015 emphasize that
the use of checks is still a significant part of how we make payments. The
new process improves on the old check settlement process, and makes use
of innovative technologies to increase the efficiency and speed of
settlement. Making the process more innovative enables more rapid, more
convenient, and less expensive deposits.
Question: How does the check truncation process affect me?
Answer: You will still use a physical check to make payments, and when
you receive a check, you will be able to deposit it through the branch.
However, there is now a new, advanced and accelerated method available to
deposit the check, and you will be able to deposit the check without going to
the bank branch—through the banking application.
In addition to changes in the deposit process, another level that will change
is the process of returning a check. As stated, the change means turning the
physical check into a picture file. Therefore, when a check is returned to a
customer, two alternatives will be possible: The customer may ask the bank
to deposit the check a second time, or to receive an “output of a returned
check” (see the answer to the question “What is an output of a returned
check”), which includes a picture of the check and the reasons for its return.
After the output is generated, the customer will not be able to redeposit the
check or transfer it to a third party.
Question: Will the check clearance duration change as a result of the
new process?
Answer: As of the beginning of the process, the check clearance duration
will not change. But thanks to the Electronic Check Clearing Law, once the
process is completed, we will be able to shorten the amount of time that
elapses from when the check is presented for payment to the time the
customer’s account is credited. (Currently, the credit from the check is final
only after three business days.) This means that a customer depositing a
check will be able to receive the final credit in his account more rapidly.
Question: When will the new process begin?
Answer: The law is being implemented in two main stages:


November 8, 2016: Beginning on this date, the following banks will
enable their customers to make interbank deposits of checks through
the banking application: Bank Hapoalim, Bank Leumi, Arab-Israel
Bank, Israel Discount Bank, Mercantile Discount Bank, Bank
Mizrahi-Tefahot, First International, Otzar Hahayal, Bank Massad,
U-Bank, and Poalei Agudat Yisrael (PAGI).
February 2018: Checks deposited through other means, as well as
shekel checks from all Israeli banks, will be presented for settlement
via an electronic process.
Question: What is the benefit for me as a result of the new process?
Answer: The new process will make it possible to provide less expensive,
more innovative and more intuitive banking services for customers. The
check imaging will make it possible for banks to expand the check deposit
services through the banking application. Currently, it is possible to deposit
checks through the application, at some banks, only if they are drawn on the
same bank. But starting on November 8, 2016, at most banks1, the customer
will be able to make use of the banking application in order to deposit
checks from other banks as well, and he will not be required to come to the
branch in order to deposit the check for payment. As a result, the costs of
depositing a check will be reduced by up to 75 percent, since electronic
deposit is considered a customer-executed transaction (and for customers
on the tracks service, it will be counted within the transactions permitted
without payment in that channel).
Question: Will the new process include all checks and all banks?
Answer: The new process will include all checks denominated in shekels.
The process will be implemented gradually. The first stage will begin on
November 8, 2016, when interbank clearance will be enabled between most
banks1 in Israel for checks deposited through the banking application. The
second stage will begin in February 2018, and will include all banks in
Israel, as part of which all checks undergoing interbank clearance will be
presented for settlement in an electronic manner.
Question: Am I required to do anything different?
Answer: If you don’t want to, you are not required to change your behavior
with checks. Nevertheless, the new process will give you the ability to
choose whether to come to the branch in order to deposit the check, or to
make the deposit without coming to the branch by using the banking
applications. If you usually deposit checks through a teller, the new process
1
Bank Hapoalim, Bank Leumi, Arab-Israel Bank, Israel Discount Bank, Mercantile
Discount Bank, Bank Mizrahi-Tefahot, First International, Otzar Hahayal, Bank Massad,
U-Bank and PAGI.
will also make it possible for you to lower deposit costs by about 75 percent,
since electronic deposit is considered a customer-executed transaction, and
for customers on the track service, it is considered one of the transactions
permitted without payment in this channel.
Question: I deposited a check and it was returned. What possibilities
do I have?
Answer:
1. Ask your bank to redeposit the check if there is nothing to prevent
this.
2. Ask the person who gave you the check for a different form of
payment.
3. Ask your bank for a document called an “output of a returned
check”.
Important: If you ask for an “output of a returned check” (see answer to the
question “What is an output of a returned check”), you will not be able to
redeposit the check or transfer it to a third party once you receive the output.
Question: What is an “output of a returned check”?
Answer: In the past, when a check would be returned, the customer would
receive the physical check, containing the reasons for which it was returned.
Today, when a check is returned, the bank must—at your request—provide
an output of a returned check that replaces the physical check, and serves as
admissible evidence in legal proceedings (court or Enforcement and
Collections Agency).
Important: If you deposited a check through the banking application and the
check is returned, and you are interested in receiving an output of a returned
check, the bank will notify you before producing the output that you may
not present the check for collection a second time, and that it must not be
transferred to a third party.
Question: I decided to ask the bank for an output of a returned check.
What details must I ensure appear on the output?
Answer: A hyperlink to Appendix 314 of the Clearinghouse Rules—Output
of a returned check. (In Hebrew)
Question: Do the banks’ applications enable scanning of a check? Is
the process simple?
Answer: The implementation of the Electronic Check Clearing Law, 5776–
2016 will assist in the development of cheaper, innovative and more
intuitive banking services for customers. Since each bank enables different
technological services for its customers, you must check with your bank
whether it enables checks to be deposited through the banking application.
Checks can be deposited through the banking application, without
physically depositing the check itself, through the “Cellular check deposit”
service in the bank’s application, by photographing the check and sending it
to the bank online using an encrypted technology. In this way, the customer
avoids the need to come to the branch or to a self-service machine in order
to make the deposit. Through this method, only checks labeled “To the
payee only” can be deposited, and they must be for an amount lower than
NIS 10,000. Once the deposit is made, the customer will be asked to keep
the original check for at least three business days.
Question: Photographing the check through the application is not easy,
and my business deposits dozens of checks each day. Will it be possible
to scan the checks in a way other than through the cellular banking
application?
Answer: Starting on November 8, 2016, you will be able to deposit checks
through the cellular banking application. Other technological services that
enable the remote scanning and depositing of checks without the customer
needing to come to the branch will be made possible by the banks beginning
in February 2018. In any case, each bank offers different technological
services to its customers, and therefore, when the time comes, you must
check with your bank whether it enables this service.
Question: Will it be possible to deposit post-dated checks to be held?
Answer: The Electronic Check Clearing Law, 5776–2016 has no effect on
the deposit of post-dated checks since the change begins only once the
check is presented between the banks. Therefore, a post-dated check may be
deposited only at the branch, and will remain as it has been done until now.
When a post-dated check is deposited, the bank will keep the physical
check, and only on the date on which it can be presented, and where the
presenting bank presents the check to the paying bank, will the presenting
bank turn the physical check into an image of the check.
Question: is the Electronic Check Clearing Law, 5776–2016 a digital
solution that serves as an alternative to checks?
Answer: No. The physical check will continue to exist, and a person
drawing checks will continue to write paper-based checks and to give them
to the beneficiary. The Electronic Clearing Law provides new ways to
deposit and credit the beneficiary’s account. The new process is intended to
streamline the deposit process between the customer and his bank, and the
clearance between the banks, by changing the communication procedure
between them. This communication will now be done through a digital
image file as an alternative to physically shipping the check from the bank
where it was deposited to the bank on which it was drawn. It also changes
the process of handing a refused check.