New Canadian Payments Standards: What It Means to You

Updated: March 1, 2007

The Canadian Payments Association (CPA) and its member financial institutions have implemented a new check processing system using image technology. This industry-wide initiative makes check clearing more efficient by allowing checks to be cleared electronically. Canadians need to alter checks to meet the new standards to allow imaging of all checks.

Why has the CPA changed the Canadian check specifications?

The new check specifications are a key part of an industry-wide plan to modernize Canada's check clearing system through image technology. The new specifications are designed to ensure that high-quality images can be captured from the checks for use by financial institutions and their customers, and to make check processing more efficient. For more information on this initiative, consult the CPA's web site (www.cdnpay.ca).

When do the new specifications come into effect?

The new check specifications are in effect now. Businesses that have not yet updated their checks are strongly encouraged to do so by June 30, 2007 in preparation for the transition to the new clearing process new clearing process. Any new check orders printed after that date should reflect the new "image friendly" specifications.

Where can I obtain the new version of the CPA's Standard 006?

The new version of Standard 006 is available on the CPA's web site (www.cdnpay.ca), and the new "image-friendly" check specifications are described in Part A.

What are the main changes to check specifications?

Changes to check 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 checks using the international date format (YYYYMMDD).
• A mandatory serial number in the MICR line encoded at the bottom of the check (the serial number was previously an optional field in the MICR line).
• An increase in the minimum length of checks to 6.25", 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 check, including the date field and the amount in figures.
• Disallowance of elements that may hinder the capture of images or data from the check. 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 checks 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, 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 checks.
• New printing requirements on the reverse of the check 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 colorful backgrounds that have been used on checks to date may interfere with image quality and may need to be changed.

For more details, consult Standard 006, Part A.

How do the changes affect individuals and companies that use checks?

ALL CHECKS WILL REQUIRE SOME CHANGES.

• For customers that order checks through their financial institution, the new check formats have been available since April 2005.
• Companies that have custom checks printed by a supplier will need to ensure that formats are modified to comply with the new standard.
• Companies that use an internal system to generate checks will likely need to make some system modifications. They will also need to update their check stock to reflect the new printing requirements on the reverse of checks.
• Companies that use a financial software package to produce checks will need to modify it or obtain a new version once the supplier has updated the package to reflect the new check specifications, as well as updating their check stock to reflect the new printing requirements on the reverse of checks.

How can check printers, software providers and organizations that produce their own checks confirm that their new versions meet all of the new specifications?

Based on these changes, businesses and financial institutions should review their existing check issuance hardware and software. Older technology such as dot matrix printers may not calibrate sufficiently to comply with the new standards laid out by the CPA. In addition, many companies using standard laser printers with remanufactured MICR toner cartridges will find that shortcomings in MICR registration and signal strength will result in significant bank rejects of checks.

Check printers, software providers and companies that print their own checks are strongly encouraged to provide pre-production samples to their financial institution's quality assurance division to ensure that they meet the requirements of the new standard. These organizations should contact their financial institutions for more information about the testing process and timelines.

Are the specifications for other MICR-encoded documents changing?

Specifications for some other MICR-encoded documents, such as money orders and bank drafts, inter-member debits, settlement vouchers, point-of-sale contingency vouchers, Canada Savings Bonds, provincial savings bonds and Canada Post money orders have been published as section 6 of CPA Standard 006, Part A. These items must also conform to the specifications set out in sections 3 to 5 of Standard 006.

Specifications for traveler's checks, paper Pre-Authorized Debits (PADs), gift certificates and coupons are currently being reviewed to determine what changes to the current specifications will be necessary for the image environment.

Is the CPA's new check standard compatible with comparable international standards?

Standard 006, Part A includes some requirements that are specific to the Canadian environment, such as the positioning of elements within the MICR line and the minimum size of checks (6.25 inches). For other aspects such as background screening and reflectance, the CPA has adopted ANSI standards where possible.

Does magnetic ink still need to be used in the MICR line on checks that will be processed in the new imaging environment?

Yes, magnetic ink must be used in the MICR line, as automated processing equipment will still rely on magnetic ink to read data from the MICR line. Under the CPA's current check imaging initiative, image technology will supplement MICR processing rather than replace it.

Does Source Technologies provide MICR solutions in Canada?

Source Technologies has provided MICR check printing solutions in Canada for over ten years. Our Canadian MICR toner cartridges meet or exceed CPA standards. Our MICR laser printers are engineered specifically for MICR check printing and provide the most extensive check issuance security features available.