At first glance, the image replacement documents that will be printed after the Check Clearing for the 21st Century Act takes effect seem to represent simply an additional step in the check-processing workflow.
But the IRD is an entirely new type of negotiable document that will create challenges - and opportunities - for banks. Banks now can create secured check image files easily enough, but printing and managing them along the journey to becoming IRDs is uncharted territory.
- How does a financial institution manage and control a simple check image file?
- What happens if the machine jams while printing an IRD?
- What if one out of three checks printed on a single sheet of paper contains an error?
- How does the printer relay that information to the financial institution so that the same file is not duplicated two hours later?
IRDs or substitute checks, the offspring of check images, are carelessly being printed without a glimmer of concern by the bank for how the items evolve from an image file into a negotiable document.Branch item capture, high-speed imaging, image retrieval, and storing issues have been the focus of Check 21 compliance for months, but banks will begin printing IRDs in their back-office operation centers fairly soon. Adding IRDs to the already overwhelming amount of traffic in these operation centers will increase exponentially the likelihood of fraud and inefficiency, especially for banks that don't secure the print delivery channel.
Today banks use operations centers for processing paper checks and printing documents that do not need to be secured. However, check images must use a specific file format under the Check 21 guidelines, and the progression of that image into a document creates obstacles. For example, some banks expect to distribute secure documents in a PDF format, which is not designed for secure printing.
Printing substitute checks should be as easy as pointing, clicking, and producing safe, tamper-free documents; unfortunately, this process is potentially risky business. Many bankers will print unsecured check files, unaware that securing the network where negotiable instruments are transmitted is necessary to protect their core business. Securing the printing network prevents employee fraud or inadvertent costs from good old-fashioned human error.
An unsecured network creates an unstable and vulnerable banking environment where fraud and accidental print replication threaten the viability of Check 21 compliance and IRD processing.
The industry must consider the risks in creating IRDs and start discussing the possible solutions. The initial dialogue should center on securing data and the potential encryption of the substitute check.
Identifying secure components for a hardware set-up would allow banks to know whether files need modifying when multiple printers are used, and it would help banks ensure an IRD prints where it's supposed to.
And simply addressing workflow and production management issues up-front would help identify the best method for verifying a document has been successfully printed.
IRDs need a safe route for their journey to becoming a secure document.
