check stock guidelines

FraudGuardCheck Stock Guidelines

October, 2011

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ii Check Stock Guidelines

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Table of contents

1 Overview of Check Characteristics Guidelines .......................................................................... 1

2 Background ............................................................................................................................... 2

3 Paper Stock and Check Design Requirements ......................................................................... 4 Paper Stock ................................................................................................................................................. 4 Check Design .............................................................................................................................................. 4

4 Payee Information Verification Requirements ........................................................................... 6 Fonts on Checks ......................................................................................................................................... 6 Location and Spacing on Checks ................................................................................................................ 7 Backgrounds on Checks .............................................................................................................................. 7 Target Marker Guidelines ............................................................................................................................ 8

5 Payee Location & Fraud Identification ..................................................................................... 10 Samples of Conforming Checks ................................................................................................................ 10

Sample 1 10 Sample 2 11

Samples of Non-Conforming Checks ......................................................................................................... 11 Sample 1 11 Sample 2 12

6 Secure Seal Check Guidelines ............................................................................................... 14 Seal and Check Background ..................................................................................................................... 14

Seal location on checks .............................................................................................................. 14 Seal Design ................................................................................................................................ 15 Example Seal Designs ................................................................................................................ 16

7 Signature Verification Requirements ....................................................................................... 18

8 Check Stock Verification Requirements .................................................................................. 20

9 Check Printing Requirements ................................................................................................. 22

10 IRD Processing ..................................................................................................................... 24 Sample of Conforming IRD ........................................................................................................................ 24

11 Check Layout Guidelines ...................................................................................................... 26 Forward Presentment Front Image ............................................................................................................ 26 Return Front Image Layout ........................................................................................................................ 27

12 Other Factors ........................................................................................................................ 28

Check Stock Guidelines iii

FraudGuardSecure Seal Check Guidelines Fiserv

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1 Overview of Check Characteristics Guidelines

FraudGuard is a comprehensive automated check fraud mitigation solution. Generally, the FraudGuard platform solutions use sophisticated data and image analysis to confirm that the check presented for payment has not been altered since issuance. The FraudGuard solutions use a common set of base administrative modules along with optional solutions that focus on specific issues, including:

• Positive PayPLUS (PPP) with issue file

Positive PayPLUS enhances traditional positive pay by using digital interrogation technology to analyze payee line information and optionally to extend the analysis to the check number and dollar amount, and compare the extracted data with the “checks issued” file provided by the bank’s corporate customer to validate consistency or to identify an alteration to the field data. The bank’s client will need to send the conforming payee name information on an X9 compliant check format of acceptable quality.

• Positive PayPLUS with Secure Seal encoding

Positive PayPLUS is also offered with patented Secure Seal encoding. In this case, a unique data encoded seal (in the form of a graphic symbol) is printed on the face of the check. Encoded in the seal is information unique to that check (the customer’s check data), which may include the payee name, dollar amount and account number or other customer defined data. This approach uses standard printing means to encapsulate the issue information for a self authenticating item as an alternative to solely relying on an issue file sent by the bank’s corporate customer.

• Signature Verification

FraudGuard Signature Verification uses compound mathematical algorithms to analyze a signature for each signatory of an account, using snippets of valid signatures from each customer’s check images received over a period of time. Suspect items, including potential forgeries, rules discrepancies (such as two signatures required), and missing signatures can then be investigated..

• Counterfeit Detection

Counterfeit Detection automates the analysis of the key static elements on the face of a check. Key check fields such as bank name and logo; check, account and routing numbers; name and address; marks, lines, font type and size are automatically interrogated for placement, size, and/or content by FraudGuard based on customer defined rules.

There are increasing opportunities for check fraud with the advent of Image Exchange, merchant or corporate capture, along with the increased availability of digital copying. FraudGuard’s sophisticated technology provides proven reduction of fraud when used in combination with best practices such as applying reasonable check printing and processing guidelines.

Check Stock Guidelines 1

2 Background

This document outlines the check design, processing, and printing characteristics that are required to optimize the Digital Interrogation (DI) of the items. Throughout the document there will be many references to consistency of the information. In order for the Digital Interrogation process to optimally extract the targeted image based information, consistency of the check per account number is expected. Less than optimal conditions will result in less than optimal results.

Since this solution operates in a variety of production environments, there are external factors, not within the control of the software, which can impact data extraction rates of the Digital Interrogation: these are listed in Other Factors (page 28).


3 Paper Stock and Check Design Requirements

An integral part of the total solution is the paper stock and check design. Consistency of the check is important as it is verified in the check paying process. High quality paper stock always adds appeal to clients and forms the background for information printed on the item. As a result, the quality of the check stock can dictate the quality of the resulting image in the check paying process.

This section lists the requirements for paper stock and check design.

Paper Stock

• The check dimensions are consistent for each Bank Account number

• The paper weight is 24-lb MICR Bond

Check Design

• Conforms to published ANSI X9.7 –X9.100 layout standards

•α The check stock and design are image friendly. Background washes out for black and white images when scanned using standard 200/240dp monochrome cameras (see ANSI guideline X9-TG-2 section 3.2.2).

• Any printing, shading or other use of the back of checks must conform to Federal Reserve Bank Regulation CC Standards

• Any overlays that are part of the check design or printing should always be consistent


4 Payee Information Verification Requirements

The Positive PayPLUS application extends traditional positive pay field validation by including the verification of the payee name information. In order to optimize this verification process, payee criteria should be consistent.Ttherefore when printing checks the following characteristics should be followed:

• The location of all the payee information (e.g. name, date, courtesy amount and legal amount) must be consistently printed in the same location by Account number.

• All payee information (payee name, dollar amount and date) must be in black ink.

• The area used should be consistent with the X9 standards Check Printing Guidelines:

Fonts on Checks

• Serif vs. Sans Serif: The recognition engines perform best with certain popular Serif and Sans Serif fonts (Sans Serif fonts, like Arial, do not have the small decorative feature at the ends of strokes). The most effective fonts include:

• Arial (not Arial Black or bold)• Arial Narrow (not bold)• Century Gothic• Dotum (not DotumChe)


• Gulim• Latha (not bold)• MS Gothic• MV Boli• Trebuchet MS• Univers• Courier• Courier New

• Fixed-width vs. Variable-width: The best results are obtained with fixed-width fonts (for example, Courier New), where each letter occupies the same width, as opposed to variable-width fonts in which, for example, the letter i takes up less space than the letter m.

• Size: The application provides optimum results when a minimum font size of 12 points or higher is used. Larger fonts are preferred, as smaller fonts will lower the yield.

Positive PayPLUS Image Replacement Documents (IRDs) must not contain fonts below 12 points due to the “reduction” process employed in the IRD creation process. Font sizes larger than 14 point provide no benefit.

• Case: Payee information printing is optimized when all UPPER CASE characters are used (lower or mixed case will lower the yield).

• Style: Payee information printing should not be Bold, Italic, Cursive, Underlined, or “Narrow”. Each of these styles leads to poor results.

Note: Although previously allowed, Times Roman has proven to produce very poor results, especially when the image has been converted to an IRD. It is therefore not recommended.

Location and Spacing on Checks

• The payee and address block must be left aligned.

• The payee name(s) must start on the first line of the payee address block.

• If there is an address line present, it must always follow the payee line. There must be no blank spaces or lines between the payee and the address. Blank lines in the body of the field can provide fraudsters with a location to add a payee and must be avoided.

• The payee and address blocks should use single-line spacing between all lines.

Backgrounds on Checks

• Any background patterns, images or watermarks on the check stock that is within the area of the data to be recognized can interfere with the recognition results.



• The data to be interrogated (e.g. payee, amount) must be surrounded by an area of white space, to minimize the interference of any irrelevant printed information on the item, and allow for some shifting/offset of the data’s location during the scanning process.

• The Amount area and all background and design graphics should have high reflectivity. It is recommended that half-tone printing be used for the non-critical portions of the check. Pastel colored backgrounds are optimal.

Target Marker Guidelines

The target markers for location of the Payee, specifically, “PAY TO THE ORDER OF” must satisfy the following criteria:

• Must not be italic, bold, or underlined

• Must be in all UPPER CASE font

• Must be printed horizontally on the check

• First line of a target marker must be at the same level on the check and to the left of the payee or, if it is above the payee, the payee must be immediately below it (with no space for an additional payee to be added).

• The target marker for location of the Amount known as the “CAR amount” must be preceded by a $ sign (e.g. $100.00).

5 Payee Location & Fraud Identification

The system automatically locates and reads all of the lines of the payee and returns this recognized value for comparison. All lines of the actual payee must be provided and specified in the issue data that is submitted for comparison and validation in order to catch all fraudulent information.

The application scans several possible locations on the face of the check to automatically locate the payee/address block. This is based on the standard X9 check layout and location of keywords, like “to the order of”, to identify a left-justified paragraph as the payee/address block. Information that is sufficiently outside of the payee/address block will not be considered for automated verification. The area around the payee/address block is uniquely determined by the DI engine on a per image basis, but as a general rule 2 lines above and below the payee information defines the payee zone. For example, if there is sufficient white space between a payee value that is either above or to the right of the payee/address block, the value may not undergo the recognition or comparison process.

Samples of Conforming Checks

Sample 1


Sample 2

Samples of Non-Conforming Checks

Sample 1

• There should not be any symbols, characters or numbers above the payee line because the DI engine will treat them as part of the payee. A barcode is acceptable.

• The “Pay to the Order of” must be above or at the same level as the payee.

• Over-spray interferes with the area of the check that is being interrogated.



Sample 2

• The ID number above the payee line interferes with the DI on a check, similar to sample 1.

• The area to be recognized (i.e. payee) must not have any background patterns (e.g. “VOID” background), watermarks, or seals as this can interfere with the DI process.

6 Secure Seal Check Guidelines

Fiserv Secure Seals are highly adaptable, and can be fitted into virtually any shape, or placed anywhere on an item. However, to ensure a good decode rate there are a number of points to note when designing a check that incorporates a secure seal. These guidelines focus on optimal read rates rather than strict rules since there are a number of parameters that can be varied and the final design is usually a balance between size, aesthetics, placement and required data content.

Seal and Check Background

Checks generally have a printed colored background. This can include a number of anti-counterfeiting features, such as the ‘void’ that shows up when a check is copied. When scanned through a sorter equipped with imaging, some of these features will become visible in the image and could interfere with the decoding of the seal or the payee information that will be subsequently digitally interrogated. Although a seal can be printed over a colored background including these features, the following should be noted:

• The colored background must ‘wash out’ when the check is imaged in black and white at standard sorter resolutions (200 dpi). For this reason lighter colors are preferred (see ANSI guideline X9-TG-2 section 3.2.2).

• The seal as well as targeted variable check data must be printed in an area that does not include features such as the ‘void’.

• Optimal results are more likely to be obtained from printing on a plain white background, compared to a colored, highly patterned one, so if the option is available, an area should be left blank for the seal to be printed on.

Seal location on checks

A seal can be placed anywhere on a check. However there are a few things which can affect the decision of placement:

• Images from sorters tend to be lower quality around the edges; therefore the Seal must be at least 1/4 inch from the edges of the check.

• Various endorsements are applied to checks, both manually (by bank tellers) and automatically (by sorters). The manual endorsements are difficult to control, but the automatic endorsements are typically applied in an area in the center of the check. The center area must be avoided for seal placement for this reason.


This still leaves a large area on the left and right, a band along the top and a band at the bottom, above the MICR area, that can all be used for a seal. If necessary a seal can be designed that fits around a corner to make the best use of the available space.

An important aspect of seal decoding and Digital Interrogation in general is the way the software searches the image for the seal or target data. This searching can be improved by ensuring that there is a clear area around the target, whether it is the seal or Payee Name. The size varies according to the image resolution, but typically anything more than 1/20 inch distant will be ignored by the decoding software. So if the seal is printed at least 1/20 inch from any large, dark area decoding is improved. Small areas can virtually touch the seal with no ill effect, but from an aesthetics view a uniform clear area around the seal looks better.

Seal Design

The actual design of the seal template has a major effect on the ability to decode. A seal for a check, which will typically be printed at 240-300 dpi uses a nominal block size of 6 x 6 pixels (a block represents a single bit of data). Although a smaller block size would give a larger data capacity, decoding from a sorter image is worse. Similarly a larger block size gives better decode rates, but contains less data. As well as block size, the actual area available to encode data controls the amount of data that can be inserted. To ensure that a partially damaged seal is still readable, the data is permuted and embedded more than once.

The seal content is not really a consideration in terms of the check design, but it is worth understanding the relationship between data length, seal size and readability, so that the check designer is aware of the size limitations imposed by the data requirements.

The information that is embedded into a seal can be varied at the time the seal template is created. Within the ‘standard’ check template the following fields can be included:

• Payee• Value• Date• Check Number• Transaction Number• Account Number• Routing Number



The Account Number and Routing Numbers are usually not included as they have to already be known and be correct for the decode software to use the correct template. For identification, only one of the check number or transaction number is usually required, so the other can be omitted.

Apart from the payee, all the fields are purely numeric and their size is largely determined by the size of the corresponding fields on the MICR line (the date is either 8 or 6 digits).

The length of the payee field tends to be a compromise between a long field—that will be largely redundant and will mean the data is repeated less often, but can contain more of the actual payee name—and a shorter field that will allow the data to be repeated more often (improving the decode rate), but sometimes truncates the payee name. Importantly, whether the payee name is supplied by an issue file or seal, the issue file information must be as complete and consistent in length as what is printed on the check (e.g. John Smith on the check should not appear as Smith, John in the issue file).

The amount of data embedded (and thus the number of times the information is repeated) is also determined by the size of the seal. The larger the seal, then the greater the amount of data that can be embedded, and/or the better the readability.

Example Seal Designs

Example 1: The Border Seal

A border seal 8 inches wide and 0.25 inch high (printed at 240 dpi) with a black border around it can accommodate a payee field up to 50 characters long. If the same seal were printed at 300 dpi its size would be reduced to 6.7 inches by 0.2 inch.

Example 2: The Signature Seal

The Signature Seal is typically 2.2 x 0.6 inches (printed at 240 dpi), with a payee field length of 25 characters. The data occurs twice. If the same seal were printed at 300 dpi its size could be reduced to 1.8 x 0.4 inches. Alternatively, if the size were maintained, the data could be embedded 3 times.

Example 3: The Logo Seal

Seals can also be designed by wrapping the seal around a logo. In these cases, the size of the seal is a function of the area available for encoding the data and should typically be printed no smaller than the Signature Seal.

Conclusion

From our experience the best seal designs, giving a good balance between data content and readability, are the signature and logo seals.


7 Signature Verification Requirements

The Digital Interrogation process in this solution will compare the signature on the check against the reference signatures for that account. In order to properly provide this verification, signature criteria should be consistent and have the following characteristics:

• The check layout and location of the signature information must be consistent with ANSI standards (bottom right corner and clearly above the MICR line).

• The reference signature dataset should be complete before the check is validated against it. There should at least be 5 valid reference signature snippets for each signatory in a given account.

• The data to be interrogated must be surrounded by an area of white space—at a minimum one-twentieth of an inch on all four sides. This will minimize the interference of any irrelevant printed information on the item, and allow for some shifting/offset of the data’s location during the scanning process.

• The signature on the check must not extend to the MICR line.

• When more than one signature is used, the signatures should not overlap each other. If any overlap exists, it will impact the engine’s ability to identify and split multiple signatures.

• The signature must be well defined when printed (signed), with sufficient contrast (dark ink) that scanning does not cause any fading.

• IRD images must not be included in the signature reference build process.


8 Check Stock Verification Requirements

Check Stock Validation automates the analysis of all static and dynamic elements on the face of a check. All check fields such as bank name and logo; check, account and routing numbers; name and address; marks, lines, font type, and size are automatically interrogated for placement, size, and/or content by the system based on customer-defined rules.

• The colored background should ‘wash out’ when the check is imaged in black and white at standard sorter resolutions (200/240 dpi). For this reason lighter colors are preferred (see ANSI guideline X9-TG-2 section 3.2.2).

• Optimal results will be obtained from printing on a plain white or lightly colored background, compared to a colored, highly patterned stock.

• Static text such as 'Pay To', 'Date', 'Amount' etc. should be separated from other printed or handwritten text, and should not be overwritten.

• Text must be printed using at least a 12-point font with a clear (preferably Sans Serif) typeface to avoid blurring and merging when converted to an IRD. See also Fonts on Checks (page 6).

• The check layout must not vary for a defined template within a specific account, unless a unique template is defined for every new check format or layout.

• The reference templates must not be created using IRD images.

• Using different logos or pictures for the same template/layout within an account will reduce the read rate.

• The layout should not have heavy border patterns.

• Check endorsement must not be applied over the static printed text on the check.


9 Check Printing Requirements

The printing of the checks is an important step of the process. High quality printing will enhance the quality of the image that will be used in the check paying process.

• The printing should be by laser or ink jet; laser is preferred.

• Minimum of 600 DPI

Checks that have poor quality printing of check information and/or seal will subsequently produce poor quality check images. This will negatively impact the recognition of values by Digital Interrogation and the decoding of seal values.


10 IRD Processing

IRD (Image Replacement Document) checks include a reproduction of the original check as a substitute for the original. In order to fit in the allocated print area, the original check image is scaled down to standard conforming percentages, so there will be some loss of detail that will impact Digital Interrogation and seal decoding.

As a general rule, payee decode from conforming IRD items remains a technology challenge that results in reduced Digital Interrogation results.

This scaling down of the image reduces the ability of Digital Interrogation to read values from the face of IRDs. In order to have a reasonable measure of success at recognizing values from IRD items:

• The items must follow the ANSI X9.90 standard for creating IRDs so that the front image area can be pre-processed correctly by Digital Interrogation.

• The items must follow the Requirements listed above.

• The items must be identifiable as IRDs from position 44 of the MICR; this indicator is required so that Digital Interrogation will process the item accordingly.

Although processing institutions have no control over the quality of the image used on the IRD, it is worth noting that IRDs produced with monochrome 200/240 dpi images give far better read rates than those using grayscale images.

Sample of Conforming IRD

Note: This is a sample IRD of a personal check, but for a PPP scenario, the items would be business checks using business size check stock and layout.


11 Check Layout Guidelines

Forward Presentment Front Image


Return Front Image Layout


12 Other Factors

There are other factors that will affect the read rate that this section will address. These factors preclude Digital Interrogation of the targeted data (e.g. payee, signature, check stock) or Secure Seal and include:

• Images with poor check print quality

• Images with poor scanned image quality

• Non-standard items such as items in carriers, items that contain Lundy strips and/or items with front endorsements or occlusions that interfere with targeted data read zones

• Processing stamps or endorsements that the POS, teller or other first presentment point entity may add to obscure information

• Audit trail sprays that obscure targeted information or confuse check layout

• Additional characters directly above the payee line would interfere with the Digital Interrogation ability to identify first payee line

• The “Pay to the Order of” below the level of the payee name, making it difficult to recognize the payee

• IRDs created with poor quality original images, or original images scanned as grayscale instead of black and white.

When the check is presented for payment, the party (POS, teller, or other entity) that first receives the item may inspect the item and add annotations. If this is positioned around the payee name, it may result in lower read rates by Digital Interrogation. Occlusions on the face of the check over targeted data are outside the control of software and will eliminate the potential to read data underneath the occlusion.

As the check is processed through the Financial Institutions and other entities, an audit trail is sprayed on the check. Some Financial Institutions and entities put their audit trail on the front of the check, and such a spray could overlap with the payee information. Through testing it has been determined that these audit trails negatively affect the read rate of the Digital Interrogation as well as manual inspectors.

Many corporate clients will outsource some or all of their check printing. Some outsourced check printing companies may add an audit trail to the printing of the check. Depending on where and how this is accomplished, it could affect the read rates of the Digital Interrogation.

Any additional numbers, symbols, or characters that are added to the payee/address block above the first payee line are unacceptable for Digital Interrogation. This will impact the recognition engine’s ability to locate and identify the first payee line in the payee/address block, and will often cause it to raise an exception for a fraudulent payee above the genuine one.

If the key phrase “Pay to the Order of” is below the horizontal level of the first line of the payee/address block, the recognition engine will have difficulties locating the first line of the payee value. It is


recommended that the key phrase is positioned to the left of and at the same level as the first line, or above the payee/address block. Where the key phrase is split over more than one line the payee should start at the same level, or just below the word ‘Pay’.

Check images that are scanned or digitally captured at poor quality may negatively impact Digital Interrogation and the decoding of seal values. Problems such as excessive skew, image too dark, image too light, streaks or marks from the scanning process could cause these difficulties.
