While image-based clearing has undoubtedly made the cheque settlement process much quicker and loss costly, with the new technology have come a few new problems. Foremost among them is cheque image quality – simply put, making sure that the scanned cheque is readable by the person (or machine) on the other end of the transaction. If it is not, the cheque image risks being sent back, incurring costly fees and time spent on research, repair, balance adjustments, etc.
Cheque image quality problems are most often caused by poor handwriting – a survey of several American banks, for instance, found that around 20% of cheques had to be re-scanned or manually entered into the clearing system, and that handwriting caused up to 80% of these issues. Fortunately, the worst that happens is usually a simple re-keying that takes a few seconds of the operator’s time. The really costly errors tend to occur when background printing, physical wear or damage, or incorrect MICR printing fools the scanner into an incorrect interpretation of the information on the cheque. These tend to occur on fewer than 1 in every 1,000 scanned items; however, at a cost of up to £20 each to resolve, they can quickly become one of the most expensive parts of a bank’s image clearing process. Overall, the cost of dealing with these errors totals in the hundreds of millions of dollars annually in the United States alone.
Scanning equipment has become much better over the past decade at producing legible images – and in the past few years, software image enhancement and cleanup tools have made it possible to address even more of the worst problem documents.