Bankers are voicing concerns that the security features built into paper checks may not survive the transition to digital images, but a Financial Service Technology Consortium study indicates several features remain viable after imaging.
After evaluating several next-generation fraud-fighting features, the study, released last week, found that "by and large they work quite well," said Frank Jaffe, the president of MorSecure, a technology security management firm in Falmouth, Maine. "We think this is great news. There is a set of security features, which we did not know [about], that are effective in counteracting fraud in an all-image environment."
The FSTC would not discuss specific security approaches, citing concern that releasing such information could become a how-to guide for criminals. However, Mr. Jaffe, the project leader for the study, said the most effective features fall into three categories: bar codes, proprietary symbols that can be read by machines, and design features of the check itself, such as typefaces, layouts, background patterns, and borders.
Zachary Tumin, the executive director of the industry-backed research organization, said, "We highly recommend that financial institutions and check issuers consider adopting additional security features such as those included" in the tests.
The FSTC envisions an industrywide system to verify security features that can use imaging technology at the point of presentment, Mr. Jaffe said.
The industry group, which includes banks, vendors, and government agencies, began the project in November. Nineteen companies, including 10 financial institutions, were involved in developing the tests, which initially evaluated 60 security features from 50 vendors; that list was pared down to just 13 features that can be applied to consumer or commercial checks.
Checks were run through a variety of processing environments to simulate different systems, including automated and manual detection, high-speed and low-speed sorting, gray-scale and black-and-white images at several different levels of resolution, and processing equipment from seven different vendors. In all, 28 different combinations of equipment, image type, and image resolution were tested.
The testing was performed by the International Biometric Group, a professional testing firm, and the results were validated by an independent statistician.
Five of the features survived imaging more than 90% of the time on full-size images, but two others failed the test at low resolutions. In general, higher-resolution images performed better than lower-resolution ones. However, larger files take longer to transmit and are more expensive to archive, Mr. Jaffe said.
And some technical issues could limit the effectiveness of the features. For example, one feature would work only when a specialized camera was used to convert the check to an electronic file, he said. "Operationally, there's a series of trade-offs you have to make."
The testing demonstrated that there are security devices that will function within images, Mr. Jaffe said, but there are interoperability issues that could make it difficult to implement them in a full-production system.
"Today, since every feature is a little bit different, it's like a Tower of Babel," he said.
In addition, the security features are not widely used today, and those that are available are typically used only by the paying bank. For example, positive pay information can be embedded in a bar code on a business check to verify the dollar amount, but an altered check will not be flagged until the check image arrives at the paying bank.
In a second report, also published last week, the FSTC defined a set of 16 defects that could affect the quality of images. The list includes folded or torn originals; images that are too large, too small, too dark, too light, or out of focus; and other factors that could limit the usability of the image by a bank that doesn't have access to the original.
The goal of that particular effort was to develop a set of image standards, which will become more important as banks begin to exchange digital files, Mr. Jaffe said.
"If you are only talking to yourself, it doesn't matter if you are not using the same language as everybody else," but once banks start sharing images, they will need to speak the same language, he said.
