Cheque Image Exchange An Update

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Cheque Image Exchange --- An Update

• What we need to know to get ready

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Definitions

• Cheque Image Exchange (CIE) Truncation
  Electronic Codeline Presentment (TECP)
• CPA Standard 006 cheque printing standard
• Bills of Exchange Act(BEA) governing
  legislation for cheques

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How cheques clear today?

• Branch/ATM receives cheques on deposit and sends
  by courier to one of six processing centres
• Processing centre sorts cheques for other bank
  destinations
• Cheques proceed via courier and plane to
  destination
• Receiving processing centre sorts items and reads
  MICR for posting and filing
• Cheques filed and stored
• Some cheques outsorted and forwarded to clients

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The New Environment
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Why are we doing this? What caused this action?

• Volume of cheques continues to reduce by 4
  annually its getting more expensive to process
  the physical items
• The costs to move to a more efficient environment
  have reduced
• The legacy of 9/11
• Fraud is a growth industry

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Benefits

• More timely reconciliation.
• Ability to provide images of items and companion
  images will enhance fraud detection of
  counterfeit cheques.
• Earlier notification of returned/unpaid cheques.
• Potential new product/service offerings for
  clients.
• Reduction of cost/space needed for paper
  storage.
• Reduced risk (improved contingency planning).
• Faster cheque tracing and statement re-creation
  (self-serve options).
• Overall improvement in efficiency faster
  clearing, reduced transportation costs,
  processing time and handling.

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Key Dates

• New Cheque Standard - June 2007
• Interbank Testing - July 2007
• Start Phased Client Intro - January
  2008
• Complete Migration of Clients - April
  2009

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What should businesses be thinking about?

• How will imaging/TECP change your current
  operations?
• What areas currently utilize the paper cheque?
• How do you deal with returned items?
• What efficiency opportunities does imaging
  present?
• Which of your systems will need to be changed?
• When will changes have to be planned or budgeted?
• How will your staff access your images?
• Will you archive your items or use a 3rd party or
  your FI?
• How will your employees or customers be effected?
• Are there are regulatory issues?

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Cheques The New Standard

• CPA Standard 006 for cheques came into effect
  January 2005 two-year transition period ends
  June 2007.

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New Cheque Standard

• Key points
• June 2007 (extended from December 2006)
• Cheques must be image friendly
• Uniform layout to encourage automated reading
• Uniform fonts in key areas
• Date field to be numerical
• Restrictions on backgrounds (some pantographs)
• Restrictions on colours on reverse of cheque
• Words BACK/VERSO on reverse of cheque

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Common Questions about Cheques

• What happens if older cheques are processed after
  June 2007?
• Why does the date have to be numeric?
• Where can I get a spec sheet or, get a cheque
  tested?
• Does CPA certify my software as being compliant?
• Does the Legal Amount Field have to be printed?
• What about my fraud security devices on the
  cheque?

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New Features

• Faster turn around of items on deposit (ie. NSF
  returns)
• Representment
• Quicker traces or self service
• Fraud prevention tools (ie. payee match)

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What Should I Think About?

• How will imaging/TECP change current operations?
• Which of your organizations systems will need to
  be changed?
• What efficiency opportunities does imaging
  present?
• Are there regulatory issues?
• How will employees and customers be affected?

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Other issues to consider

• Legal aspects need for evidence in court?
• Fraud issues is imaging a safer solution?
• Audit - can imaging help the process?
• Long term storage what is the best imaging
  solution?