Source: Canadian Payments Associati...

Source: Canadian Payments Association

Did you know that the Canadian Payments Association (CPA) is leading an industry-wide initiative to make payment processing more efficient? The modern system will capture images of cheques and other MICR-encoded payment items (such as currency orders) so that they can be cleared electronically. Implementation of this of recent origin clearing process is slated to begin in late 2006

In preparation for the shift to image-based clearing, the CPA has issued a recent version of the Canadian standard for cheque formats and printing specifications (CPA Standard 006 Part A). These of recent origin specifications are designed to maximize processing efficiency and make secure that high-quality cheque images can be captured from cheques for use by means of financial institutions and their customers. As a issue of the new specifications, all cheques used on customers of financial institutions operating in Canada will require near changes.

Prior to finalizing these specifications, the CPA invited commentarys from stakeholders and took into account input received. Although principally organizations that participated in the consultation proces indicated they could make the transition to the just discovered cheque standard within one year, the CPA and its member financial institutions have established a two-year transition period to make secure cheque printers, software providers, and businesses that print their allow cheques have ample time to make the necessary changes. Thus, all Canadian cheques should conform with the strange specifications as outlined in Standard 006 Part A, through December 31, 2006.

The CPA is urging all cheque issuers to begin preparing for this transition as early as possible. In addition to obtaining modern cheque stock, some modifications to the internal combination of parts to form a wholes used to produce cheques may be required. Note: Cheque printers, software providers, and businesses that print their be in possession of cheques are strongly encouraged to provide pre-production samples of their fresh cheques to the quality assurance division of their financial institution to confirm that these samples come up to face to face the new requirements. These organizations should also contact their financial institutions for more information about the testing proces and timelines.

(Part B of Standard 006 contains the existing specifications for other MICR-encoded payment items, like as bill payment remittances and wealth orders. The CPA will be reviewing these tokens of items in more detail to determine which of them will also be adapted to the image environment, and what related format changes will be required for their inclusion in the imaging project)

Why the fresh system?

In the current clearing proces about 5000000 cheques have to be transported between financial institutions each business day. The new arrangement will make processing more efficient by means of capturing images of cheques and other MICR-encoded payment items in like manner that they can be cleared electronically.

And the benefits of cheque imaging lengthen out beyond the clearing system. recently made known image-based services will give business customers faster and more convenient access to cheque images than today's customary practice of returning cancelled cheques with customer statements. In fact, several financial institutions are already offering image-based services to any customer groups, and "early-adopter" clients have been enthusiastic about its advantages. Although specific features of image-based services and the related expenses will vary somewhat between financial institutions, the range of potential benefits for business includes:

* More timely reconciliation as a proceed of being able to view cleared cheques more quickly;

* Faster research and tracing to address customer inquiries;

* Earlier notification of answered cheques;

* Potential new services to combat fraud, so as enhanced positive pay using encrypt bar collection of lawss or seals, and automated signature verification; and

* Reduc expenses and space requirements for the physical storage of cancelled cheques.

What's modern in the cheque specifications?

Key changes to cheque specifications, as outlined in Part A of Standard 006 include:

* Adopting a numeric date field in single of three specified formats (YYYYMMDD MMDDYYYY or DDMMYYYY). Field indicators must be printed below the date field to indicate which format is being used.

* A mandatory serial number in the MICR line encod forward the bottom of the cheque (until now the serial number has been optional);

* An increase in the minimum long duration of cheques from 6" to 6 1/4" or 1588 cm to provide sufficient space for a serial number in the MICR line;

* Standardized positions for first note of the scale fields on the cheque, like as the date field and the amount in figures;

* Disallowing ultimate parts that may hinder the capture of images or data from the cheques (for example, inverse printing, italics or slanted baptismal vessels a bottom border printed below the MICR line, and the use of black carbon onward the reverse of cheques will not be permitted);

* A provision to render certain that security features do not interfere with explanation data or "areas of interest," as defined in Standard 006 Part A-either prior to or employment imaging. In particular, if pantographs are used, they must not be visible upon images captured from original cheques;