ACH — Automated Clearing House. An electronic funds transfer system that processes domestic payments, generally in the form of credits and debits between bank accounts. In that respect, the mechanism is similar to drawing or paying a check. In the United States, The ACH Network is the official ACH processor.
Area Scan — or area array camera. The name for the technology used to take a picture of a certain 2D area all at once. This is what most people would call a “regular” camera. Antonym: Line Scan.
Back counter capture — See Branch Capture.
Banking Kiosk — or Deposit Kiosk. A self-service terminal, similar to an ATM, but generally less complex and not connected to interbank networks. Many are dedicated to a single purpose, such as check deposit, cash dispensing, or billpay, although others combine multiple functions into one machine. Often used as a simpler and less-expensive option in cases where full-service ATMs are not needed.
Bank of first deposit — Sometimes abbreviated BOFD. The bank to which a customer first presents a check for deposit (or to be cashed). This is where the account credit for the check after clearing resides. As such, the BOFD is an important component for return items due to clearing problems with the deposited check, for various causes such as Non-Sufficient Funds (NSF). If a check is determined to be “not good,” it is returned to the BOFD to be debited from the depositor’s account. Prior to electronic clearing, the bank of first deposit for a paper check was, by definition, the only bank of deposit. As electronic check clearing, including Remote Deposit Capture and Mobile Deposit gained acceptance, it became possible for a check to be presented electronically at one bank and physically at a different bank, making the BOFD distinction more important. As the gateway into the clearing system, the BOFD may be liable for losses from fraudulent or duplicate deposits if it does not take certain precautions. See also: Reg CC, Restrictive Endorsement, Duplicate Deposit.
Bank Scanner — Generally synonymous with check scanner, with a few qualifications (see link for details).
Big Iron — An informal banking industry nickname for full-size, medium- and high-speed check reader/sorter machines, many with 24 to 36 sorting pockets. Often used to refer to the IBM 3890 or NDP200 High Speed Document Processor specifically, but may also include reader/sorters from other manufacturers, such as the Burroughs Quantum or NCR iTran series. The “Big Iron” nickname is also used in the IT world, referring to older mainframe computers.
Bitonal Image — A pure black-and-white image: Each individual pixel is either 100% bright white (#ffffff) or 100% dark black (#000000). There are no other colors or shades of gray. This produces a very small file size — less than 20 KB for most scanned check images — at the expense of some readability. 200 dots per inch (dpi) black-and-white bitonal images are the legal standard for the check clearing system in the United States and much of the world.
Branch automation — The replacement of a manual process with an electronic equivalent in the retail branch; for example, the use of ATMs or kiosks to handle routine transactions so that human tellers do not have to. This may also refer to automating behind-the-counter processes, such as counting cash.
Branch Capture — The practice of capturing check images at a bank branch with a single scanner at the back counter. Typically uses a large high-speed scanner and a single operator. Checks are captured in large batches at the end of the day, or at regular intervals throughout the day, and are not scanned at the time of the transaction. Not to be confused with teller capture.
Can’t-Read — Short for MICR Can’t-Read. When the scanner cannot determine the correct letter or number to assign a scanned character, typically in the code line along the bottom of the check. Often caused by incorrect MICR Signal Strength or poor Image Quality. Typically triggers an error and a re-scan or manual keying. Not to be confused with a MICR Misread, where an incorrect character is substituted for a correct one.
CAR/LAR — Short for Courtesy Amount Recognition and Legal Amount Recognition. The courtesy amount is the value of the check written in numerals (either handwritten or machine-printed), while the legal amount is the value of the check written long-form in words. CAR/LAR is the process by which a machine reads the value of a check using optical character recognition (OCR) and related technologies.
Check 21 — Common nickname of the Check Clearing for the 21st Century Act, the 2003 law that gave check images the same legal standing as original paper checks for clearing and settlement purposes. Also referred to as the Check 21 Act.
Check fraud — An all-encompassing term for any attempt to steal money through the use of checks. This may refer to physical fraud such as forgeries and altered documents; to electronic fraud such as duplicate deposits or altered images; to account-related fraud including identity theft, account takeovers, and unauthorized use; or to miscellaneous fraud such as check kiting.
Check Scanner — A specialized scanner purpose-built for capturing checks. Differs from ordinary (“off-the-shelf”) scanners in several ways, particularly the inclusion of MICR reading capability (via magnetic read as the primary read technology, with optical as a secondary). They also use specialized motors and sensors, and output specifications.
Check Truncation — The overall term for replacing paper checks with digitized check images to facilitate the clearing process. As a result, the paper check stops at the point of first capture (it is “truncated”), and the remainder of the clearing process is completed using an image. More directly this enables exchanging of checks electronically, through methods including Teller Capture, Branch Capture, Remote Deposit Capture, and other types of check capture. Spelled Cheque Truncation in most of the world outside the United States. The full name is sometimes informally shortened (or truncated) to simply Truncation within the industry.
Check Washing — The practice of erasing the information written or typed on a check. Usually involves fraud in which the value or the payee name of a check is altered or rewritten.
Clearing bank — Any financial institution that participates in the national clearing system to exchange checks. In the United States, this means nearly every bank or credit union. In some other countries, a few of the largest banks may act as the gatekeepers to the national clearing system, and process transactions on behalf of the smaller financial institutions.
Cloud storage — Storing data on a computer (server) other than the local PC being used to access that data. A cloud server can be either a computer operated by your own company, or by an external third-party provider.
CMC7 (font) — A commonly used MICR font, prevalent in Europe and South America. Each individual CMC7 character is also a bar code with unique spacing, allowing the magnetic signal to be read as an “on/off” toggle. The other widely used MICR font is called E13B.
Confidence Score — A rating used in the MICR or OCR process to define the read confidence for a particular character, using a software-based algorithm. Typically uses a scale of 0-10 or 0-100. Note: Although a higher confidence score usually means that the read is more likely to be correct – there are cases were a misread can still have a high confidence score. This is why amount balancing and account number verification are used to ensure accurate processing.
Control Totals — For check deposits, refers to entering the total number of checks in a batch and the value of those checks prior to scanning, as a way to detect errors before submitting the batch for deposit.
Contact Image Sensor (CIS) — The part of a check scanner that actually makes an image from the check. Unlike a traditional camera, a CIS is a line of light-detecting sensors that captures rows of one pixel at a time in rapid succession, from a fixed distance very close to the paper.
Discriminator Roller — A mechanism that applies constant light pressure to a stack of checks in the input hopper of a check scanner, so that exactly one piece of paper at a time separates from the stack and enters the feed path. Usually made of a softer material than the main rollers. Was traditionally a rounded wheel shape like a roller, but many different shapes and forms exist today, and can rightly be referred to as simply discriminators.
Distributed Capture — Refers generally to the process of scanning checks at multiple individual locations instead of a larger centralized location. Often used to describe the move by banks toward Teller Capture and away from sorting checks at regional operations centers. Sometimes refers to Remote Deposit capture situations in which a business has check scanners installed in many different locations.
Double-Feed— When two checks enter the scanner’s feed rollers at the same time. Most of one check is usually obscured from the image sensor behind the other, producing an error or a “missing” item in the deposit. Also known in the check-processing industry as a Piggyback.
DPM — Documents Per Minute, the standard measure of scanning speed for check and document scanners. The rated speed of check scanners is determined by measuring the scanning speed for 6-inch checks.
Drive Belt — A belt comprised of rubber or other natural or synthetic materials that transfers mechanical force from one component to another using a pulley-like motion. Some check scanners employ internal drive belts so that one motorized roller can keep multiple other rollers turning at the same rate.
Duplicate Deposit — When the same check is deposited twice, usually at two different financial institutions. Typically, duplicate deposits are achieved by first depositing a check electronically via remote deposit (or mobile deposit), and then presenting the original paper document in person, at a physical branch or other check-cashing location. While sometimes done accidentally, this is also a significant fraud concern. See also: Remote Deposit, Mobile Deposit, Restrictive Endorsement, Reg CC.
Duty Cycle — For check scanners, the approximate maximum number of items per day that can be scanned without excessive wear and tear on the device.
E13B (font) — One of the two widely used fonts in MICR printing. E13B is the standard format for North America, India, and much of Asia. Its uses linear signal strength as the means of detection, and its characters are printed with large “bulges” to create unique magnetic wave patterns. The other common MICR font is called CMC7.
Embedded Scanner — Refers to a scanner with a small built-in processor and sufficient memory to run simple programs. These scanners are useful when the host environment has operating-system or processing-power constraints.
Ethernet scanning — Refers specifically to network scanning via a hardwired Ethernet cable. Certain check scanners are equipped with a rear Ethernet port specifically for this purpose.
Exception Item — A check that cannot be processed as normal. Types of exceptions may be MICR rejects, CAR/LAR rejects, or even damaged paper. They may also occur when a check is unreadable, or for reasons such as account-related problems, missing information, or other issues. Exceptions need to be corrected before processing can continue.
Exit Pocket — The part of a check scanner that “catches” checks exiting the paper path after they have been scanned.
Federal Reserve — The Federal Reserve Bank (FRB), the central bank of the United States. Among other things, the Federal Reserve work with the industry to establish nationwide standards and guidelines for the banking system, as well as providing infrastructure for many parts of the payments system.
Feed Rollers (Intake Rollers) — Round wheels consisting of rubber and other synthetic materials that pull checks from the input tray into the entry of the scanner’s paper path.
Firewall — A security system designed to block unauthorized traffic to a computer network. Either a hardware system or a software system can be considered a firewall.
Franker — A special ink roller that prints a fixed mark or stamp on the front of a check during the scanning process. Usually an optional feature on a check scanner, included by request. Not to be confused with a rear inkjet endorser, which is the more common way of endorsing scanned checks, and prints on the back of the document.
ICL — Image Cash Letter. ICLs are files containing check images, which are exchanged electronically between banks in the clearing process. See also X9 File.
ICR — Intelligent Character Recognition. A type of Optical Character Recognition (OCR) system that continually improves recognition patterns with the help of machine learning. It is especially useful for recognizing handwritten letters and numbers, historically one of the most difficult things for OCR engines to successfully process.
ID Capture — Or ID Card Capture. Refers to the process of capturing a scanned image of a customer’s drivers license or other identification card, as opposed to the traditional “swipe” that only reads the information in the magnetic strip. Capturing an image allows for more advanced optical analysis
Image Enhancement — The practice of removing problems with a scanned image that cause it to be unreadable. This often means removing background interference, or adjusting brightness and contrast for images that are too dark or too light to read. Sometimes called Image Cleanup. See also: Image Thresholding.
Image Quality — The overall readability / negotiability of a scanned check image. If image quality is too low, the check image will likely cause an error or be rejected in the clearing process. See also: Non-Conforming Image, Image Quality, Image Thresholding.
Image Survivable Features — The parts of a scanned document that remain readable after conversion to an image. Has two major, and opposite, uses in security — features that do not survive the scanning process can make it difficult to produce fakes and forgeries; while features designed to survive the scanning process can be used for positive validation.
Image Thresholding — The process through which a grayscale image is transformed into a bitonal black-and-white image, by converting each pixel to white or black depending on how dark it is. Pixels brighter than the cutoff are turned to white; pixels darker than the cutoff are turned to black. The cutoff point itself (which can be adjusted up or down) is called the threshold.
In-clearing — Refers to checks presented to a bank from a clearing house (e.g., inbound or incoming checks). In other words, when a check from an account at Bank A is deposited at Bank B, “in-clearing” is when Bank A receives the check back and is expected to pay Bank B. In modern clearing systems, this is usually an electronic copy of the check, not the original paper check. See also: Out-clearing.
IP address — Internet Protocol address, a string of numbers used to identify devices connected to a network. An IP address may be used to externally identify a computer that is connected to the Internet; or IP addresses may be used by individual devices to communicate with each other within a local network.
JPG — or JPEG, is a lossy file format associated with images. Can also refer to the compression technique used to produce a .JPG file from a raw image. The acronym JPEG originally stood for Joint Photographic Experts Group. See also: Lossy Compression.
Jogger — Or check jogger. A device that uses mechanical motion, such as gentle shaking or vibration, to even out a large stack of paper documents so that the bottoms and edges line up. This helps the documents lay flat when inserted into a feeding or sorting mechanism, improving the effectiveness and reducing errors or jams.
Line Scan — The name for the technology used to capture images in one-pixel “slices” and reconstitute them into a whole. Contact image sensors use one form of line scan technology, while true line scan cameras also exist that can make use of lenses for adjustable focus and distance. Antonym: Area Scan.
Lossless Compression — A method of compressing image files so that all the original pixel data is preserved. When decompressed, the image can be reverted to its original state.
Lossy Compression — A method of compressing image files that sacrifices some of the original data in order to achieve the smallest possible file size. Images compressed using this method will not look exactly the same when restored to their original state.
MICR — Magnetic Ink Character Recognition. Often used to refer to the characters printed in magnetic ink at the bottom of a check (the “MICR line”), as well as the technology for reading that magnetic ink.
MICR Head — The part of a check scanner that reads the magnetic ink on a check. Typically a metal surface that imparts energy into the ink and reads the resulting magnetic waveforms.
MICR / OCR Mismatch — When the scanner picks up a different character using the magnetic signal (MICR) than it does using visible light (OCR). The two are often captured simultaneously, and if they do not match, an error and a manual inspection is triggered. Frequently used as a safety feature against Misreads.
Microprint — Extremely small print that is often used as a security feature on checks, ID cards, and other important documents. It is typically small enough that it appears as an ordinary line to the naked eye, but is actually comprised of tiny letters or patterns. Microprint is a widely used anti-fraud tool because it is extremely difficult to fake with common equipment. While scanners with resolutions of at least 600 dpi can actually read microprint with some accuracy, few printers exist that are capable of matching the very small print size.
Misfeed — When a check or document gets stuck in the scanner track, causing a paper jam.
Misread — When a scanner reads an incorrect number in part of a check — for example, when it is “fooled” into reading a 2 instead of a 5. The incorrect number is substituted for the original one, possibly without generating an error. This can occur in either the MICR or OCR portion of a document. Sometimes called a Substitution. Not to be confused with a Can’t-Read error. See also: MICR-OCR Mismatch.
Mobile Capture — See Mobile Deposit.
Mobile Deposit — The process of photographing a check using a mobile phone camera (or comparable tablet-type device) and depositing it into a bank account, usually through an app or a mobile website. Essentially, the same things as Remote Deposit Capture, but carried out on a mobile device instead of a regular computer.
Multi-Feed — Describes a scanner that has a slot or hopper allowing a stack of checks to be inserted, and then automatically scanned in quick succession. Also frequently referred to as a “high-speed” scanner, or colloquially, a “horseshoe” scanner.
Non-Conforming Image (NCI) — Refers to a check image that is rejected by the receiving bank in the clearing process, usually because it is unreadable.
Network scanning — The practice of capturing checks with a scanner connected to a network, and controlled from a remote server. This may refer to either a hardwired or a wireless network connection, and the scanner may be attached to a specific intermediate device such as a thin-client workstation, or it may operate in a standalone setting or be shared by multiple devices.
OCR — Abbreviation for Optical Character Recognition. This is the process through which machines automatically identify printed or handwritten characters on a scanned document.
Onboard memory — The amount of random access memory, or RAM, contained onboard a check scanner. This is important for certain types of scanners that run programs in addition to the basic image capture functions, including network-ready and Serial Embedded scanners.
On-Us Check — Also called an On-Us Item. A check that is written from an account at the same bank at which the customer ultimately deposits or cashes that check. For example, if Jack writes a check from his account at Bank A, and gives it to Jill, and then Jill deposits it into her own account at Bank A, then that check would be an on-us item. These checks are often easier to deal with because they can be settled using the bank’s own internal processes, rather than sent out through the clearing system and presented to a different bank. (note: Both parties do not need to have accounts at the same bank for an On-Us item to occur, although that is a common way for it to happen.)
Out-clearing — Also referred to as Transit checks. Any check sent out from a bank to a clearing house. In other words, when a check from an account at Bank A is deposited at Bank B, “out-clearing” is when Bank B sends the check back through the clearing house for settlement. See also: In-clearing.
P2P payments — Abbreviation for Peer-to-Peer or Person-to-Person payments. These could also be considered “C2C” transactions in traditional terms. A catch-all term for payments made between one individual consumer and another individual consumer. While P2P is often assumed to mean a mobile transfer by default (and this is a common use case for it), it may also refer to any consumer-to-consumer payment, including checks, cards, and ACH. In fact, most mobile P2P transfers involve one of these payment methods as the underlying transaction type.
PDF417 — A widely used format for 2D barcodes. The 417 in the name comes from the length and width of the “codewords” contained within the pattern. Each codeword is a horizontal 1D pattern made up of 4 black “bars” of variable length, with white “spaces” in between. The total length of the bars and spaces in each codeword add up to 17 horizontal units.
Piggyback — See Double-Feed.
POS — Point-of-Sale. Any physical location at which a business accepts payments from customers. Traditionally, this meant a cash register, or more generally a storefront, and both of those definitions would still be correct. More recently, an expanded definition of POS may include mobile terminals and card readers, as those devices have increasingly come into mainstream use.
RDC — Abbreviation for Remote Deposit Capture.
RDCC — Remote Deposit Cash and Check capture. This involves capturing both checks and cash at a remote location, greatly reducing the number of bank runs or armored car visits. Typically accomplished using a check scanner working in tandem with a smart safe.
Reader/Sorter — Large, high-speed document scanners with many exit pockets, designed for sorting batches of thousands of checks in a row. These massive machines could often measure 20 feet (6m) or more in length and weigh more than a ton (1,000 kg). First introduced in the 1970s, their usage peaked in the 1980s to 1990s, then declined with the implementation of Check 21 as smaller and less expensive options became available. The last reader/sorters went out of production in the early 2010s.
Real ID — A new federal standard for government-issued identification cards, including driver’s licenses, which formally takes effect in October 2020. Real ID-compliant licenses are required to contain certain standardized information about the bearer, and meet certain security standards. Among other things, the use of a 2D barcode containing key information in PDF417 format is required.
Reg CC — Short for Regulation CC: Availability of Funds and Collection of Checks, a set of rules by the Federal Reserve Bank about the collection and settlement of checks. Among other things, it specifies rules for maximum hold times and funds availability; exception items; returned checks; endorsements; substitute checks and check images; the clearing process; fraud liability in certain cases; and more. It has been updated several times since its original implementation, to reflect modernizations of the U.S. payments system. It is the practical implementation of the Expedited Funds Availability Act (EFAA). The EFAA was passed by Congress in 1987 to specify how quickly banks must make funds available after a customer makes a deposit.
Remote Deposit Capture — The act of depositing a check into a bank account without physically presenting the original document at a bank, ATM, or other collection point. This is usually accomplished by capturing an image of the check desktop check scanner or a mobile phone camera. See also Mobile Deposit.
Restrictive Endorsement (Indorsement) — A physical marking printed on a check, usually by the receiving bank, to denote that it has been deposited and reduce the chance of duplicate deposits. In the case of mobile deposits, the bank may require the customer to write a phrase, such as “For Mobile Deposit Only” and the account number on a check before it is accepted. The Federal Reserve Bank’s Reg CC specifies liability rules for duplicate deposits according to whether the check was endorsed, and which bank accepted it first. See also: Reg CC, Duplicate Deposit, Virtual Endorsement.
RNDIS — Remote Network Driver Interface Specification, sometimes called “Ethernet over USB.” This technology emulates IP connectivity, allowing the USB-attached device to be addressed with network protocols. Note: There are several other Ethernet-over-USB protocols in use; RNDIS is the Microsoft proprietary version that works with Windows and many Linux distributions.
R/T number — Abbreviation for ABA Routing Transit Number, a nine-digit sequence of numbers that identifies the bank or credit union on which a check is drawn. This is the first string of numbers printed in magnetic ink on the MICR line at the bottom of U.S. checks. Also sometimes referred to as “Routing Transit Number,” or simply “Routing Number.”
Serial Embedded — See Embedded Scanner.
Signal Strength — How closely the magnetic ink on a given check conforms to standard specifications. Ink with too much magnetism is considered overprinted, while too little magnetism renders it underprinted, and either can cause problems reading the characters.
Single-Feed Scanner — Describes a scanner that allows only one check to be inserted at a time. The operator must feed each document into the intake slot by hand.
Sorting pocket — If a check scanner has multiple Exit Pockets, these can be used to separate documents by category. Examples might include pass/fail on image quality; on-us versus out-clearing checks; checks versus money orders; or other uses. Few check scanners have more than two exit pockets for sorting, although larger machines may have as many as 36 for advanced sorting capabilities.
SSL Encryption — Secure Socket Layer, formerly the most widespread protocol for secure encryption of information sent over the Internet. Since replaced by Transport Layer Security (TLS). Sometimes collectively referred to as SSL/TLS.
Substitution — See Misread.
TCR – Teller Cash Recycler — Teller cash recyclers are essentially miniature “vaults” that can collect, count, sort, store, or dispense cash according to the teller’s needs. Cash recyclers help eliminate time-consuming vault transactions, in which a teller station has to manually “buy” or “sell” cash to the vault when it accumulates too much cash, depletes its own supply of currency, or needs to exchange one denomination of bills for another. Its cash distribution mechanisms also eliminate potential mistakes made when processing cash out transactions.
Teller Capture — The practice of capturing check images at a bank branch with a scanner connected directly to a teller workstation. The workload is distributed throughout the day, across several scanners and several operators per branch. Checks are scanned at the time of the transaction. Not to be confused with branch capture.
TIF — or TIFF, short for Tagged Image File. A image file format used in check capture that is typically associated with high-quality, uncompressed images. Often uses lossless compression, although lossy compression can be used as well. See also: Lossy Compression, Lossless Compression.
Ultraviolet — High-frequency light outside the visible range. Certain inks in the ultraviolet range can be used as “invisible” security features on printed documents. See also: UV Check Scanning.
USB — Universal Serial Bus. The industry standard physical connection between computers and peripheral devices. Most check scanners use either USB or Ethernet connections to communicate with their host computers.
UV check scanning — The use of a modified scanner that can detect invisible features printed in ultraviolet ink. A UV check scanner is typically equipped with an extra image sensor that works exclusively in the ultraviolet range, so two images of each check are produced: One in the visible-light range and one in UV. These invisible features have many uses in security and validation for checks and other payment documents.
Virtual Endorsement — An endorsement digitally added to the image of a check after it is scanned. No physical mark is made on the original document. This practice does not provide any protection against duplicate deposits of the original paper check, or against liability for same. It is used primarily in cases where the customer does not retain the original check; for example, when it is deposited at the teller window or at an ATM. See also: Restrictive Endorsement, Reg CC, Duplicate Deposit.
VPN — Virtual Private Network. A virtual secure point-to-point channel that is extended over a public network, allowing users to privately exchange data with each other. Frequently used in corporate intranets to allow many users, including those in remote offices, to connect to common applications, databases, and other resources.
WiFi enabled — Having the ability to connect to a wireless local area network, generally through one of the IEEE 802.11xx protocols.
X9 file — A catch-all phrase for the DTSU X9.37 – 2003 or the X9.100-187 – 2013 federal standards for Image Cash Letter files. These are the official file formatting guidelines for batches of checks sent through the Federal Reserve Bank’s electronic clearing system.