Canada's New Cheque Standards: How Do They Affect You?		News Resources Evron Newsletters  Contact Evron
	Cheques from all Canadian businesses are now expected to conform to new specifications. Find out how your company is affected.

New Cheque Standards: Transition Period Extended to 2008

All businesses ordering new cheques should now ensure that they meet the new specifications - in line with the CPA's June 30, 2007 deadline. However, the CPA has extended the transition period from the "old format" business cheques to September 2, 2008. This extended transition or “grace period” will allow businesses that are still working on the changes to use up their existing supply of cheques and to make any required changes to software.

Canada's New Cheque Standards: Date Extended

As of May 12, 2006, the deadline for adopting the new cheque specifications has been extended to June 30, 2007 in order to allow businesses more time to make the necessary changes to their cheques and modify or update their softwares involved in cheque production.

This timeline will continue to ensure that cheques are “image-friendly” in preparation for the transition to image-based clearing.

By December 31st, Cheques From All Canadian Businesses Must Conform With New Specifications

One year ago this month, Canada's banks started supplying consumers with different looking cheques. Subtle but noticeable changes in size and style had been incorporated to comply with a new national standard, designed to facilitate an industry move towards image based cheque clearing. These new specifications from the Canadian Payments Association apply to every company in Canada.

All Canadian business cheques must conform with the new specifications by December 31, 2006. Below are some questions and answers explaining the new standards and to make it easy for your company to conform to them:

About The New Standards

When were these new standards developed? The new standards were initially published in January 2005. Cheque orders made through financial institutions and their supplier were fulfilled with the new format cheques as of April, 2005. The new format becomes mandatory for all businesses on December 31st, 2006.

Why have these new standards been adopted? In short, to improve the speed and efficiency with which cheques are processed, the industry is moving towards image based cheque clearing. The technology used for this process requires a slightly different cheque format so that high quality images can be captured.

What is image based cheque clearing? Under the current cheque clearing system, physical paper cheques are gathered at the bank branch, bundled, and sent for sorting and reading at various processing centres. In some cases, a paper cheque may go through reading and sorting machines up to eight times and be transported up to four times. Approximately 5-million cheques are transported between financial institutions each day. Under the new system, an electronic image will be made of each cheque at regional processing centres. This electronic image will take the place of the physical cheque in all subsequent steps of the cheque clearing process, while the original paper cheque will be destroyed. Physical cheques will therefore no longer be available for customer statements. Instead banks will likely provide image-based statements.

What are the primary changes to the cheque format? The main changes include:

1. Adoption of a numeric date field in one of three specified formats (YYYYMMDD, MMDDYYYY or DDMMYYYY).
2. A mandatory serial number in the MICR line (This was previously optional)
3. An increase in the minimum length of cheques to 6 ¼”, or 15.88 cm, from 6”.
4. New specifications for positioning of key fields, such as the amount field.
5. Disallowance of elements that may hinder the capture of images or data from the cheque. For example, inverse printing, italics or slanted fonts.
6. Security features cannot interfere with key “areas of interest”. In particular, if pantographs (the wording that appears on the duplicate when a cheque is exposed to a copying device) are used, they must not be visible on images captured from the original cheques.
7. New printing requirements on the reverse of the cheque so that image capture can be verified.
8. 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 will not be allowed

How The New Rules Affect You

In short, these new standards mean that your company needs new cheques. This includes both the physical paper and the ability to print on it properly. Printing will be a particularly significant issue if you have an older financial application. For example, users of PFW versions older than 5.01 will likely find that the preset cheque format will not be compliant with the new standards.

Achieving compliance will require one or more of these three options:

1. Software Upgrade: Upgrade your core financial application to the current version in order to gain the control necessary to meet the new standards.

2. Software Add-Ons: Use an add-on application which can specifically address cheque printing issues.

3. Software Modification: Your current software is suitable but must be reconfigured to meet the new standards.

Evron Can Help

No matter what your needs are, Evron can help your company become compliant with the new cheque standards well before the December deadline. We understand the new cheque standards and have the technology and expertise necessary to ensure that you have a smooth transition. For more information, call your Evron sales rep or contact Fay Mendoza at: fmendoza@evron.com or 905-477-0444 x231.

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