There are usually two types of lockbox service available, one whereby the payments (cheques in this instance), their associated remittance advices and any other correspondence, and usually the envelope they were all sent in, are all physically scanned.
The more expensive service provides the same level of aforementioned scanning, and where there is remittance advice information, which is commonly a list of invoice numbers, credits notes etc that the payer expects the payment to be used to reconcile against, this is also keyed into the main text-based document that contains the cheque data (via the MICR code).
With the advent of cheque truncation, it has become common to "capture" images of the checks and associated documentation (payment coupons, for example) into a digital format for use in computer systems (i.e., TIFF, JPEG or PDF files).
These files can then undergo OCR and data validation when character confidence is low and then further specialized processing may take place.
Banks often use specialized mail processing and document scanner equipment that can scan hundreds, or thousands, of checks per minute.
This has prompted a movement to "offshore" the data entry of the information on checks to countries (e.g., India) that have abundant employees – which helps in ultimately lowering the costs.