The National Clearinghouse Association has established a registry of "image survivable security features" that could make it easier for bankers to trust digital images of the checks they process.
The publicly available registry builds on two years of research conducted by the Financial Services Technology Consortium of New York to determine which antifraud features in checks would remain effective if the checks are converted into digital images.
"The vendors needed a place to register their marks, and the banks needed a place to see the marks that are available," said Karroll Searcy, a vice president of the Dallas clearing house and its director of risk management.
Many of the security features in the registry have been available for years. For instance, since 2002, Northern Trust Corp. of Chicago has offered its corporate clients a feature that enables them to embed positive-pay information in a decorative seal.
The encrypted data looks like a border at the top of the check or a decorative scroll around the machine-printed signature, but it also describes the check's amount and can be decoded and read by Northern Trust's computers when the image arrives for clearing. However, the sending banks, which accept the checks for deposit from their customers, would not be able to read it - or even know that it exists.
Eventually, the NCHA registry could offer banks the ability to examine such security features when checks are deposited. For example, when a customer deposits a check, a teller could convert it into an image and then use data from the registry to authenticate it.
Andy Garner, a senior systems consultant for Wachovia Corp., said that the registry gives vendors and banks a starting point to take the next steps, but that the registry must be sanctioned by Accredited Standards Committee X9 Inc., an Annapolis, Md., company that sets imaging standards for the industry.
Mr. Garner, who co-chairs an X9 committee, said it could approve a draft standard for trial use for the registry and the messaging used to access it by early next year.
Frank Jaffe, the president of MorSecure, a technology security management firm in Falmouth, Maine, said that eight individual security marks have been accepted by the NCHA for inclusion in the registry.
"It puts in place one of the key pieces that people need to move forward with interoperable verification," said Mr. Jaffe, who is working with the clearing house as a consultant.
Christine S. Nautiyal, the managing executive of the Financial Services Technology Consortium's payment and check standing committee, said at least one multibank test is under way. It involves Early Warning Services LLC, a company that maintains a set of shared databases that banks use to fight fraud. The company, formerly known as Primary Payment Systems, is owned by Bank of America Corp., JPMorgan Chase & Co., Wachovia, Wells Fargo & Co., BB&T Corp., and First Data Corp.
"What you want to do is to catch it up front, where the person is depositing or the person is cashing the check," she said. When the envisioned system is fully operational, "Chase Bank will know about the Wachovia symbol and know it's a good check."
Mr. Jaffe said that the system might eventually enable merchants to validate checks when they are presented.
Ted Umhoefer, a senior vice president at Fiserv Inc. of Brookfield, Wis., said a company such as Early Warning is in a good position to offer such a validation service, because major banking companies already use it for other fraud-detection programs, such as one for spotting checks written against closed accounts.
Fiserv itself offers such services to its check-processing bank clients and those that use its shared archive of check images, Mr. Umhoefer said. The vendor has a number of client banks using the same Secure Seal technology that Northern Trust uses, as well as other fraud tests.
As the interoperable system evolves, "we would also offer ... this service on outbound items," he said, to provide client banks "a day or two heads-up on items that may be coming back."
