A remotely created payment is a payment that is authorized by the payee, drawn from their financial account, without the need for an in-person signature or other verification. The most common types of remotely created payments are payment orders, checks (RCC checks), and simple fund transfers.
Setting up a Remotely Created Check, Electronic Payment, and Money Order
Here is how each type of remote payment type works:
Remotely Created Checks
To create a RRC, you will need to have the MICR code from a valid paper check. You won’t have to provide a signature as you do with an actual paper check, and you can create one online or over the phone.
Remote Electronic Payments
Instant remote payments are usually made through third-party apps or services from your bank. A bank will ask for an email phone number—while you will need to add additional information to start in a third-party money app. To set up an account with a third-party app, you must add your banking or debit card information along with your phone number, email, and a username you create.
To share your payment information, you can provide a username, email, or phone number connected to your account. Then you can initiate the payment yourself if you have the other party’s payment info. Or they can send you a request based on your contact information.
Remotely Created Money Orders
Money orders can be used as a form of remote payment. They guarantee funds, as they must be pre-paid using cash, a credit card, or a debit card. A money order can be bought at grocery stores, banks, retailers, and post offices.
However, if you want to pursue a completely online process, a money transfer would be better. Money transfers are not the same as money orders, but they can help fulfill the same purpose. To process a money transfer, you will have to provide your bank account information, along with the recipient’s information. Once that information is verified, money can be wired to a location. Money transfer services are usually done with service providers like MoneyGram and Western Union.
How To Use or Accept a Remotely Created Payment?
To authorize a remotely created payment, you will have to go into your account (in which you want to allow payments from). For most people, a checking account is the primary withdrawal and deposit account that they use for most transactions. The easiest way to do this is online through your financial institution’s website or app.
To accept a remotely created payment, an individual or company will need to have some type of process set up which allows for these types of payments. Here are some examples of potential methods recipients can use to collect remote payments:
- A bank’s built-in money transfer service.
- Having credit cards and debit card payment services available.
- Using a third-party app such as QuickPay by Zelle, PayPal, or Venmo. Most people use these services for everyday expenses and services when paying family or friends.
- Allow customers to use electronic checks.
- Having the option of recurring remote payments. Recipients can set this up by providing a portal for users that allows them to add their bank information (routing number and bank account number) or their debit or credit card information. If you know how direct deposit works, then you know how reoccurring remote payments work!
What Can I Use a Remotely Created Payment For?
You can use a remotely created payment for all kinds of costs and purchases. Here are a few examples:
- Bill payments — taking care of utility bills, rent or mortgage payments, paying off credit card debt, making payments after taking out a bad credit installment loan, paying off bad credit personal loans, paying your insurance companies etc.
- Purchases over the phone or online.
- To set up recurring payments for services, purchases, or bill payments.
Are Remotely Created Payments Safe?
Bank-to-bank remote payments are the safest form, while remotely created checks tend to have more room for risk. When paying via a RRC, you must give your MICR information. Because no other form of authorization is needed on your own, that recipient may be able to store and use that information and create a separate remote check. Remote checks are also harder to dispute compared to other types of payments. And so, to keep yourself as safe as possible, make sure you do thorough research on who you are paying, especially with a RCC.
Difference Between an ACH Payment and a Remotely Created Payment
ACH payments occur between one bank account to another. In contrast, remotely created payments can be sent as other types of deposits. And so, if you are submitting a remote payment from one bank account to another bank account, it can be considered an ACH payment. And with these bank-to-bank transactions, you will find more security.
The Bottom Line with Remotely Created Payments
Remotely created payments are a fast and easy way to authorize funds without being present in person. You can use remotely created checks, money orders, and electronic money transfers for all kinds of purchases, expenses, and costs. The easiest and most secure way to fulfill a remote payment is to use your bank’s built in services.
References:
An Examination of Remotely Created Checks
Remote payment transaction | Glossary | PayTechLaw