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Mobile remote deposit capture took a couple of steps forward over the past week, though how big those steps are won’t be known for a while. First, alternative payments leader PayPal Inc. indicated that it was configuring its application for Apple Inc.’s iPhone to handle mobile remote deposit. And mobile remote capture software specialist Mitek Systems Inc. announced that it had obtained an important patent.
TechCrunch, a Silicon Valley news service, reported Saturday that PayPal is working on an upgrade to its iPhone app that will enable users to scan checks with the iPhone’s camera and upload them for deposit into their PayPal accounts. The upgrade reportedly will be ready in a few months.
A PayPal spokesperson did not respond to a Digital Transactions News request for comment, but the upgraded app would make PayPal a member of what is still an elite club. So far, USAA Federal Savings Bank, JPMorgan Chase & Co., and a handful of smaller financial institutions are the only ones offering mobile remote capture, though the service is the talk of the payments business. Perceived risk, technology issues, and cost seem to be the drags on the market, according to analysts.
PayPal could benefit from mobile capture because users are likely to deposit into their PayPal accounts relatively small, occasional checks they receive, checks they would otherwise take to the bank, according to Robert Meara, a senior analyst with Celent LLC who follows the remote deposit capture market. Making account funding easier could translate into faster and greater spending on PayPal. “Funding your PayPal account with checks is ingenious …it’s perfect,” he says.
According to an e-mail from Meara, between 15 and 25 financial institutions “are engaging in some mobile RDC [remote deposit capture] activity at present.” Some, maybe a majority, of those institutions are testing RDC and the activity “may or may not result in a broad offering. In addition, there are roughly 20 more [banks and credit unions] in implementation queues that may materialize over the next six to nine months.” Further, while some processors are offering mobile remote capture to their financial-institution clients, three major vendors still aren’t, though Meara expects them to have services by year’s end.
PayPal also announced on Wednesday that it was updating its app for the iPhone and its Apple cousins the iPad and iPod touch to facilitate charitable donations. PayPal Mobile 2.5 enables users to quickly locate and make donations to 23,000 charities in the U.S., United Kingdom, and Canada, including the American Red Cross and American Cancer Society. Users will be able to post their donations on Facebook. PayPal’s blog says the payment service is developing the app with partners MissionFish, the fundraising platform of PayPal parent company eBay Inc., and Artez Interactive, an online fundraising technology developer. PayPal expects Apple to approve the updated app at any time so users can download it from Apple’s iTunes App Store.
Meanwhile, San Diego-based Mitek Systems, whose flagship software product is called Mobile Deposit, said the U.S. Patent and Trademark Office had granted it Patent No. 7,778,457 on Aug. 17. “The patent covers the process of capturing a color image of a financial document using a mobile device and then transmitting the image to a server where the image can be manipulated,” interpreted, and retrieved, a Mitek release says. “The patent also covers the steps of detecting the financial document in the image, converting the image and correcting the orientation and size of the image.”
A Mitek spokesperson tells Digital Transactions News that the patent is the company’s eighth, with five more applications pending. “The [latest] patent on Mobile Deposit is more about Mitek Systems establishing a clear differentiation and intellectual-property leadership in the area of image analytics and processing,” he says by e-mail. Asked if Mitek Systems has identified any alleged infringers on its patent, the spokesperson says he has heard “no discussion to date about patent infringement, or a need to protect its rights, but I'm sure the company will take the necessary actions if it were to occur.”
The patent award countered Mitek Systems’ earnings announcement Monday, which reported net sales of $822,000 for fiscal 2010’s third quarter ended June 30, off 10% from a year earlier, and a net loss of $647,000. Mitek blamed the revenue slump on the timing of a delayed order. The company’s pipeline, however, is getting fuller. Mitek Systems over the past quarter disclosed Mobile Deposit distribution agreements with five processors and technology vendors—Wausau Financial, Fidelity National Information Services (FIS), Skyline's DirectFed, Secure Payment Systems, and Bluepoint Solutions. The company also reached agreements with The Bancorp Bank and Conestoga Bank for deployments of Mobile Deposit that will go live later this year.
