Working With Remote Deposit Capture
All My Papers has a suite of products that provide a solution for Remote Deposit Capture (RDC).
Each destination financial institution (recipient of the ICL file) requires that the file be formatted to their unique requirements. These requirements are detailed in a companion document. These companion documents are usually proprietary.
There are ready-to-run applications, enterprise platform solutions and software development tool-kits for creating you own application.
All My Paper Products such as:
Working with ICL File Variations
The X9/ICL file standard was developed to address a broad group of users who need to send check images and check image data electronically, accurately and efficiently. Unfortunately, the standard did not address some important issues. Consequently, there have appeared on the market many variations on the standard. Some of these variations fall within the scope of the standard and some do not. But nonetheless, your organization may receive or send an X9/ICL file that is substantially different than what you or your exchange partners were expecting.
All My Papers software is used by many software companies, financial institutions, and remote deposit capture vendors. Our goal is to create tools that will allow you to work, cope, and deal with the myriad of variations for Image Cash Letters, ICLs.
All My Papers software will:
- Create Forward X9/ICL files
- Create Return X9/ICL files
- Convert from one format to another for Record 61 or EBCDIC to ASCII
Officially within X9/ICL there is no provision for deposit slips. Many X9/ICL files have included deposit slip information. Some have inserted a new record number, designated 61. Others have used other records within the standard for this purpose.
There are a number of ways you can handle deposit slips within X9/ICL files. Some organizations use a non-valid ABA routing number. When this non-valid ABA number is recognized by All My Papers IRD/CRD printing software, it knows it is not a check item and will not print it as an IRD with the legend, “This is a legal….”
Some X9/ICL files have a Record 61. There are many different versions of Record 61. It appears that some software companies have developed their Record 61 based on a preliminary, non-released version of the new proposed standard and put them into their current ICL files.
A third way to deal with deposit ticket information is to include a specific type of transaction code. This is more rare, but still another variation.
Since deposit slips were not accounted for in the X9?ICL standard, including them will affect the control records for bundles and cash letters. A deposit slip could “double” the dollar amount in the control records. Since control records are supposed to be the mechanism to ensure dollar amount totals and item totals, this can seriously affect one of the fundamental functions of a standard file format for transmitting accurate information. The All My Papers software ensures that your totals are accurate.
ASCII vs EBCDIC
ASCII (American Standard Code for Information Interchange) is the most common format for text files in computers and on the Internet.
Mainframe computers and the FRB use a different standard called EBCDIC (Extended Binary Coded Decimal Interchange Code. It is an 8-bit alphanumeric coded character set for formatting text. Our software can convert from one format to another.
There are Forward X9/ICL files for forward presentment of checks, and Return X9/ICL files for returned check items. Returns may be created for various reasons:
- Insufficient Funds
- Uncollected Funds
- Lack of Endorsement
- Can’t find account number
- Bad Signature
- Not readable
New check image processing technologies can be used to eliminate a separate check scanning step in your remittance processing systems.
In the past, check image processing technology could only process checks captured by the traditional check scanner. Now technology can process check images captured on flatbed scanners, from images taken with cell phone cameras, and now even from a full page remittance voucher forms. In short, remittance capture can be converted from a two pass process to a single scan.
In wholesale remittance processing, payments are often received as a Remittance Vouchers. This is a full page multi-part document that will contain a remittance advice portion and the actual check. The check can be located in the top, middle, or the bottom tear off portions. Today remittance processors will process this voucher two different times. A full page scan of the entire voucher is performed to capture the remittance advice information in the transaction. The processor will then separate the checks from the voucher and scan the checks to capture the MICR and images required to clear the payment. The capture systems will need to reconcile the check payment instruments with the payment transactions.
Using check image identification technology it is now possible to scan the voucher one time only. This technology will be able to locate the front image of the check within the payment voucher image, extract it and produce a Black and White TIFF image compliant to image exchange standards. The rear portion of the image can be extracted from the back image of the voucher using the known location of the front. Capturing the check images at the same time as the entire transaction will also simplify the reconciliation process.
Scanning costs can also be reduced in retail remittance processing systems. Processors here will often perform a scan of each transaction that can include the remittance document, checks, and correspondence. They will perform a first pass capture of everything and then separate the checks for a second pass. Check location software can be used to identify and process the checks in this scanning stream of checks and non check images eliminating the need of a second capture pass. The check locating software will also locate and extract standalone check images captured from a page scanner.
Locating the rear image of the check from a full page image has its challenges. If the image is light with no contrast to the background of the scanner the rear image will appear as a blank document. Particularly as there is no endorsement data yet present. There is an option to electronically generate a rear image and at the same time electronically endorse this image with the deposit endorsement (e.g. “Deposit to the Account of ….”). This option can also be used to eliminate the need for duplex scanning that can further reduce scanning and processing costs.
All My Papers (AMP) provides software server technology for the processing of check images to Remittance Processors, Remote Deposit Capture software vendors and to the internal software development teams of financial institutions. AMP products include software development tool kits and applications that provide the ability to create, view, edit, format, sort, merge, print and process check Image Cash Letter files.
Now, process checks, payment coupons and remittance documents with one pass scanning using any scanner at a low fixed cost. With the All My Coupons option, you can now have fast and accurate check and payment coupon detection, reading and extraction with reasonable licensing costs.
All My Papers software has the option that reduces operation expense
- Automatically, accurately and quickly machine read barcode or OCR A/B encoded amount and account information, no need to use expensive data entry operators
- One pass scanning, no need to scan checks a second time with a specialty check scanner reduces operator expense
- Use virtually any document scanner for both checks and payment coupons One software application for multiple bank remote deposit destinations.
Low Volume Remote Deposit Lockbox
Receivable processing via wholesale and retail lockbox services is an opportunity for financial institutions to obtain and keep their corporate customers and depositors. They need to capture remittance vouchers, coupons and other associated transaction information. Because this is low volume and is a service to the corporate depositors, the financial organization needs to make the process as efficient as possible. They cannot afford a two step process of scanning all the documents and then bursting apart the checks and using a specialty check scanner. They need an economical one step process.
Lockbox service providers (both wholesale and retail) also have a problem in which payments are not only sent to the lockbox address but delivered to field branches or even misdirected to corporate addresses. These payments are defined as “stranded payments” and before affordable RDC, they had to be physically redelivered to the central lockbox processing center. Now with RDC these stranded payments can be captured remotely and sent electronically to be processed at the lockbox centers. Any associated non-check documents can be scanned and sent as well. This speeds up the collection process for these items while reducing transportation and remote handling expenses.
New Process With ALL My Checks and All My Coupons
Now scan checks and coupons on any document scanner just one time. Run the All My Coupons software option.
All My Checks with All My Coupons Features
- Scan all documents once (no need for separate check scanner
- Remittance coupons
- Automatically find and extract check images from scan
- Automatically find and read remittance coupon information using barcode or OCR A/B fonts
- Customer account number
- Payment due amounts
- Automatically prepare front and back check images for remote deposit
- Automatically extract MICR information from check images to obtain bank routing numbers, account numbers and and check serial numbers
- Create X9/ICL files for electronic remote deposit Format ICL files for over 50 financial institutions
- Verify coupon information with optional X9 VIEWER
Verify correct dollar amount with optional X9 VIEWER DE software
Remittance coupons are often used by payment processors to link a received check with a particular account or invoice. If you application requires this, All My Checks can read barcodes or the OCR-A and OCR-B data commonly used on remittance coupons for account encoding.
Figures 5 and 6 compare the significant differences between capture using a magnetically-read check scanner and capture using a cell phone camera. To produce the 200 DPI TIFF compliant image shown in Figure 5, the magnetically-read check scanner
- controls the document position, scanning speed, and skew
- uses a contact image sensor that always keeps the document in focus
- has a document illumination system to ensure the capture of images with good contrast ratio
- employs a magnetic read sensor for the capture of MICR line information
Figure 5—Check image captured by a magnetically-read check scanner
Compare this to the image in Figure 6, which shows the same check captured by a mobile phone. No longer is the check framed correctly. It is skewed and has a trapezoidal shape caused by taking the picture at an angle.
Figure 6—Check image captured by a mobile phone
Since the distance from the camera to the check is arbitrarily set by the user, the resolution of the check image is unknown. To produce a compliant TIFF image it is necessary to detect the resolution of the camera image and rescale to the 200 DPI resolution required by image exchange regulations. These issues create challenges for the MICR OCR software.
Figures 7, 8 and 9 show a check captured with different kinds of poor illumination. The poor illumination can cause shadows, blurring, and low contrast information in the image.
Figure 7—Shadows can cause all or some of the check image to be unreadable.
Figure 8—Many mobile devices don’t take clear pictures at close range; shaking also affects focus
Figure 9—Too much illumination caused by direct sunlight or a photo flash leads to low contrast
Processing RDCC check images requires a carefully designed workflow in order to capture an accurate MICR line and produce compliant TIFF images for both the front and rear views of the check image.
Figure 10—RDCC Image Processing Workflow
RDCC images from mobile phone, portable scanners or flatbed scanners are captured as color or grayscale and compressed using JPEG compression. Back-end software functions process the input and, if color, convert to grayscale image using standard color to grayscale transforms. Then an iterative process will threshold the image, locate the check image, crop it from the background, correct for skew and compensate for any trapezoidal image shape. The grayscale image may undergo this processing several times (using different processing values) until a good MICR read is obtained.
The conversion to black and white uses an algorithm that analyzes the image content to determine the optimal thresholding curve to produce a high quality black and white image. The thresholding algorithm automatically compensates for poor focus and low contrast conditions in the image.
Once the OCR technology is used to read the MICR information from the image, the final step is to scale the image to a 200 DPI resolution, adjusting for any non-symmetrical resolution detected.
The rear images are processed in the same manner except that the resolution scaling is determined from the results of processing the front image, as there is no MICR information to process on the back.
The result is an image exchange compliant TIFF image.
After creating compliant TIFF images for MICR line data extraction, the data must now be incorporated into ICL files for insertion into the exchange workflow.
Figure 11— Workflow from Remote Deposit Camera Capture devices to ICL files.
Remotely Created Checks
Remotely Created Checks do not bear customer signatures like ordinary checks. Instead, they bear a legend statement "Authorized by Depositor". This type of instrument is usually used by credit card companies, utility companies, or telemarketers
A Remotely Created Check IS a Check
RCCs must conform to standard check layout and design standards and regulations. The MICR line must be encoded using magnetic ink in the E13B font formatted in compliance with applicable ANSI standard the same as a standard check. Failure to adhere to these rules that will cause most rejections by the depositing institution
Remotely Created Check Liability
Normal check liability for payment resides with the payor institution. However, in the case of RCCs, check liability for payment resides with the bank of first deposit (BOFD) since the RCC was produced by the payee.
Know Your Customer (KYC)
Because liability for payment resides with the BOFD, it is important that institutions accepting RCCs follow the Fed’s KYC guidelines to;
- Determine the identity of each customer,
- Develop a profile of its customers typical account transactions
- Know the origin of RCC funds
- Monitor for deviations from the established profile
External Processing Code (EPC) and Remotely Created Checks
Beginning November 24, 2015, banks accepting RCC items for deposit may begin to require conformance with the X9 Standard X9.100-160-2014 Part 2.
The standard defines a new usage for the External Processing Code. A setting of 6 for this field and MICR line character is now used to identify a check item as a Remotely Created Check (RCC).
The EPC is a MICR digit that conveys special information regarding the correct handling or routing of a check or check data to financial institutions and other processors. It is also a coresponding data field in ICL files (Record 25, field 3).
Remotely Created Checks and Check 21
The technology of Check 21 enables the creation of an ICL file from the RCC images without an actual paper document ever being printed. However, while this is technically possible, REG CC from the Federal Reserve Board says that all checks must start as paper. With All My Papers X9 RCC software, RCC Checks can be printed immediately or deferred as required by the depository institution.