Canadian Cheque Specification Update

Updated: January 2007 from Information obtained from the Canadian Payment Association
(www.cdnpay.ca )

This page contains Frequently Asked Questions regarding changes to Canada’s specifications for Cheques. All Printegra facilities are able to convert Canadian Checks to meet these new standards. Printegra has purchased scanning equipment and image qualifier software to verify that a cheque is compliant with CPA standards. By marking on your purchase order “Make Canadian CPA Compatible” we will insure that your check meets the new CPA standards.

Additional Questions: If you have additional questions please go to the Canadian Payments Association web site at www.cdnpay.ca or call the Printegra Marketing department at 800-422-6070.

Frequently Asked Questions

Why has the CPA changed the Canadian cheque specifications?
The new cheque specifications are a key part of an industry-wide plan to modernize Canada’s cheque clearing system through image technology.  The new specifications are designed to ensure that high-quality images can be captured from the cheques for use by financial institutions and their customers, and to make cheque processing more efficient. 

When do the new specifications come into effect?
The new cheque specifications are now in effect and may be adopted for production of new cheques.  Printers are encouraged to begin making the required system changes as early as possible.  All Canadian business cheques should conform to the specifications as defined in Part A of the new version of Standard 006 by June 30, 2007.  (Note: The original deadline of December 31, 2006 has been extended.)   

How is the new image-based clearing process in Canada different from that of the United States?
In the United States, the Check 21 Act came into effect in October 2004. Under this legislation, U.S. financial institutions (FIs) are no longer required to exchange actual cheques in the clearing process, and many FIs have begun to exchange cheque images. However, the Check 21 Act does not mandate the exchange of images, so the participation of FIs is voluntary. The CPA initiative is designed as an industry-wide transition to image-based clearing, with all CPA members participating and exchanging cheque images.

In the United States, the Check 21 Act also provides for “substitute checks”, which are paper copies printed from the images. These are used primarily in cases where a financial institution does not wish to receive or is not yet capable of receiving images. Under the legislation, substitute checks are the legal equivalent of the original check.

In Canada when the new image-based clearing process is introduced, all financial institutions will be participating, and the images will be the equivalent of the original cheque. Therefore, there is no need for paper "substitute cheques".
 

What are the main changes to cheque specifications?
Changes to Canadian cheque specifications in Standard 006, Part A include: 

• Adoption of a numeric date field in one of three specified formats (YYYYMMDD, MMDDYYYY or DDMMYYYY).  It is essential that field indicators be printed below the date field to indicate which format is being used.  Bilingual date field indicators are accommodated for cheques using the international date format (YYYYMMDD).
   
• A mandatory serial number in the MICR line encoded at the bottom of the cheque (the serial number was previously an optional field in the MICR line).
   
• An increase in the minimum length of cheques to 6 ¼”, or 15.88 cm, from 6”, to ensure there is sufficient space for the mandatory serial number in the MICR line.
   
• Specified positions for key fields on the cheque, including the date field and the amount in figures.
   
• Disallowance of elements that may hinder the capture of images or data from the cheque.  For example, inverse printing, italics or slanted fonts, a bottom border printed below the MICR line, and the use of black carbon on the reverse of cheques will not be permitted.
   
• A provision to ensure that security features do not interfere with key data, or “areas of interest”, as defined in Standard 006, Part A, and either prior to imaging or post imaging.  In particular, if a VOID pantograph or other hidden pantograph is used, the pantograph must not be visible on images captured from original cheques.
   
• New printing requirements on the reverse of the cheque so that image capture can be verified.
   
• Some revisions to technical specifications (e.g. Print Contrast Signal) to ensure high-quality images can be captured.  For example, some complex or colourful backgrounds that have been used on cheques to date may interfere with image quality and may need to be changed.

How do the changes affect companies that use cheques?
All cheques will require some changes.    

• Companies that have custom cheques will need to ensure that formats are modified to comply with the new standard.  Key changes include adoption of the new numeric date field and printing of the date field indicators below, the printing requirements on the reverse of the cheque, and the mandatory serial number in the MICR line.
   

If a business cheque in the new format fails testing, can a customer use it until the June 30, 2007 deadline? 
Yes, provided that the cheques meet the requirements for the MICR line and other specifications that were in effect prior to the publication of the new “image-friendly” specifications, businesses may continue to use them until June 30, 2007.  However, it is strongly recommended that revised sample cheques that meet all of the new specifications be re-submitted for testing as soon as possible, and before that date.

What will happen if some cheques do not fully comply with the new specifications by June 30, 2007?
Financial institutions will determine on a case-by-case basis whether they can accept and process such cheques on an interim basis while the business makes the necessary modifications.  By making the transition to the new cheque format before June 30, 2007, businesses will avoid potential problems and be ready to reap the benefits of cheque imaging within their own organizations. 

Do the new specifications have any impact on cheque security features?
The CPA’s new cheque specifications will accommodate a range of features currently in use as well as new approaches that are emerging for the image environment, but the transition to image-based processing may have an impact on some security features.  For example, some of the traditional paper-based security features will not be visible on cheque images; however, they may still serve to protect against counterfeiting or alteration of cheques.  Any security features used on cheques must not interfere, either before or after imaging, with the MICR line or other areas of interest as defined in Standard 006, Part A.  In particular, if a VOID pantograph or other hidden pantograph is used, it must not be visible on images captured from the original cheques.  As well, certain techniques such as inverse printing that may interfere with image or data capture will no longer be permitted.