Is This the Beginning of the End of Free Remote Deposit Capture?

by Sarah Grotta 0

remote deposit

An article posted to highlighted a piece in the San Antonio Express-News covering the decision by USAA to sue Wells Fargo over patent infringement relating to USAA invented technology that makes mobile remote deposit capture (mRDC) possible.  This shouldn’t be a surprise as USAA sent letters to financial institutions last year and offered to strike licensing deals compensating USAA for the apparent use of their technology.  USAA is pursuing Wells Fargo most likely because if they win, the payback will be large and it sends a clear message to others in the banking industry:

It’s the first lawsuit USAA has filed since it warned last year that it would be reaching out to banks and credit unions to “pay their fair share” by licensing the company’s patented technology that allows customers to deposit checks remotely using mobile devices.

USAA seeks unspecified financial damages from Wells Fargo in the suit filed Thursday in U.S. District Court in Marshall.

Wells Fargo is one of the biggest adopters of remote deposit capture,” said Nathan McKinley, USAA’s head of Corporate Development, which includes commercialization of the company’s intellectual property. “We believe they are leveraging the technology to improve their bottom line, and they failed to take a license.”

More than 21 million Wells Fargo customers use mobile banking, USAA says in its lawsuit.

The lawsuit states it’s “improper for Wells Fargo to use, without permission, patented technologies that USAA has spent immense resources to invent, develop, implement and perfect.” 

Although this type of litigation sometimes takes years to resolve, if USAA prevails, this will put pressure on financial institutions to implement customer fees for remote deposit capture transactions directly or consider increasing overall checking account fees should the expense of RDC increase as a result.  Financial institutions will want to be careful about increasing fees as RDC is favorite feature of mobile banking customers. It is also possible that individual banks may already be paying licensing fees to USAA indirectly through a third party processor.  In any event, if you manage RDC products, now would be  a good time to check your relevant contracts.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

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