The Canadian Payments Association (CPA) has published new specifications for Canadian cheques as part of a plan to modernize the cheque clearing system.

The CPA is leading an industry-wide initiative to make the processing of 5 million cheques a day more efficient by capturing images of cheques so that they can be cleared electronically. Implementation of this new clearing process is targeted to begin in late 2006.

In preparation for the shift, the CPA has issued a new version of the Canadian standard for cheque formats and printing. The new specifications are necessary to ensure that high-quality cheque images can be captured.

“Standardizing key elements of cheques is an integral part of moving to image-based clearing,” said CPA president and CEO Guy Legault, in a release.

With a view to minimizing impact on stakeholders, the CPA and its member financial institutions have established a two-year transition period to ensure cheque printers, software providers and businesses that produce their own cheques have ample time to make the necessary changes. Thus, all Canadian business cheques should conform with the new specifications as outlined in CPA Standard 006, Part A by December 31, 2006.

Since most consumers order their personal cheques through their financial institutions, these already follow a more standard format than business cheques. Consequently, it will likely be possible in most cases to continue to process “old-format” personal cheques on an interim basis until consumers have used up their current cheque supply, as long as suitable images can be captured from them. As of April 2005, all cheque orders made through financial institutions or their supplier will be fulfilled with “new-format” cheques. This approach will contribute to a smooth transition for consumers.

The CPA strongly encourages cheque printers, software providers and organizations that print their own cheques to provide pre-production samples of their new cheques to their financial institution’s quality assurance division to verify that they meet the new specifications.

Key changes to the cheque specifications include:

  • adoption of a numeric date field in one of two specified formats (MMDDYYYY or DDMMYYYY);
  • a mandatory serial number in the MICR line encoded on the bottom of the cheque (until now the serial number has been optional);
  • an increase in the minimum length of a cheque from 6″ to 6 1/4″, or 15.88 cm;
  • standardized positions for key fields on the cheque, such as the date field and the amount in figures;
  • disallowance of elements that may hinder the capture of images or data from the cheques; and
  • new printing requirements on the reverse of the cheque so that image capture can be verified.

Both an overview of the changes to cheque specifications and the complete Standard 006, Part A: Standards and Specifications for Imageable MICR-Encoded Cheques are available on the CPA’s web site at www.cdnpay.ca.