CPA Compliant Business Cheques

16 June 2012
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The Canadian Payments Association (CPA) has announced new specifications that all financial institution members and consumers must conform to.
The CPA has changed the deadline to use cheques with the new layout standards. It has now been extended beyond the end of June 2007.

WHAT ARE THE BENEFITS OF CHANGING TO THESE NEW STANDARDS?

In order to make cheque processing faster and more efficient, the Canadian Payments Association (CPA) has provided an extended transition period since the new specifications were published in 2005. CPA expects the majority of cheques will comply with Standard 006 by September 2, 2008 when the grace period for “old format” cheques ends.

The new standardized layout will:
•Maximize processing efficiency because, although cheque usage had declined over the years, a large number of cheques are still transported between financial institutions every business day.
•More timely reconciliation as a result of being able to view cleared cheques more quickly.
•Faster research and tracing to address inquiries you may have.
•Earlier notification of returned cheques.
•Enhanced security with cheque images retained at the home.

FREQUENTLY ASKED QUESTIONS
Q. Why is Cheques Now/Cheques Direct Ltd making me change my cheques?

A. The changes are industry-wide and mandated by the Canadian Payments Association (CPA). All financial institutions are impacted by the change and Cheques Now/Cheques Direct Ltd is being proactive in informing our clients of this change in advance.

Q. Why are the cheques changing?

A. All changes were developed to modernize Canada’s cheque clearing system. The cheques must be image-friendly so Canadian financial institutions will be able to exchange data electronically instead of physically moving the cheques between institutions.

Q. If I ordered cheques from FirstOntario Credit Union, how will this change affect me?

A. If you ordered cheques from FirstOntario Credit Union or Davis + Henderson since March of 2005, your cheques are most likely compliant. You can continue to use your existing cheque supply until you have to place a reorder to replenish your supply. However, our company went through a recent system conversion and we should confirm that you are using cheques with the correct account number so that your cheque processing is not impacted. If you are unsure, please contact your branch for assistance.

Q. If I order my cheques from another supplier, will they be compliant?

A. To ensure that correct account numbers and visual specifications are being used, we suggest visiting your branch to have your cheques inspected by a FirstOntario employee.

•Adoption of a numeric date field in one of two specified formats (MMDDYYYY or DDMMYYYY). It is essential that field indicators be printed below the date field to indicate which format is being used.
•A mandatory serial number (cheque 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 1/4″ or 15.88 cm, from 6″, to ensure there is sufficient space for the mandatory serial number in the MICR line.
•Standardized 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, either prior to imaging or post imaging. In particular, if pantographs are used, they 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.

Q. What will happen if I don’t order new cheques by the extended date of September 2, 2008?

A. Consumers with a supply of “old format” personal cheques can continue to use them until they need to reorder, provided that a good image can be captured from them. Based on experience to date, the vast majority of personal cheques are already “image friendly”.

Q. What are the benefits of the new cheque standards?

A. The change in the cheque specifications will help modernize the Canadian cheque clearing system. The new image-friendly cheques will enable Canadian financial institutions to exchange data electronically. This will result in increased processing efficiency. The benefit to our Members will be:

•More timely reconciliation as a result of being able to view cleared cheques more quickly.
•Quicker response to your inquiries regarding cleared cheques.
•Earlier notice of returned cheques.
•At some time in the future, you will have the ability to review your cleared cheques through our internet banking system. We will advise when this is available to our Members.
•Enhanced security with cheque images retained at the home.

Q. Will I get my cancelled cheques back with my statement?

A. Some time in the very near future, FirstOntario will change the cheque return feature and you will receive imaged copies of your cleared cheques. At that point, you will no longer receive the actual cheque with your statement. The cheque image will be a legally acceptable document should you require proof of payment. We will provide more information as this change is developed.

Q. What happens to my cheques when they are no longer returned to me?

A. We are waiting for finalization of industry standards in this regard. In the meantime, your cheques will be stored at FirstOntario Credit Union.

Q. What if I need to provide an actual cheque to a non-Canadian source- will an imaged copy be considered legally acceptable?

A. Yes. The change to cheque images is also in progress in the United States and in many European countries.

Q. I’ve issued a series of post-dated cheques. Do I have to get them all back now and replace them?

A. No. These post-dated cheques will continue to be processed.

Q. What about pre-authorized debits? Are they affected?

A. No. The change applies to paper cheques only.

Q. Does this affect US cheques, or only Canadian cheques?

A. The standards are mandated for both US and Canadian cheques.

 

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