As more and more checks in this country are created by accounting software or printed by boutique printers or even, in many cases, by crooks, banks are finding their high-speed check processing equipment all mucked-up from smeared ink. Banks are not entirely sure what the problem is, which means they are not sure what they are going to do about it, but an upcoming BAI study and some possible surcharging are the likely solutions.
"Laser-printed checks are causing untold problems," notes Dave Robson, vice president, First Union Corp. The problem has bankers pulling their hair out and the Bank Administration Institute (BAI) searching for answers through a bank survey, which will try to determine check reader reject rates in banks throughout the country.
Charlene Williams, Assistant Vice President of Western Bank Data Center stated, "The discovery we have made is that many of the small laser and ink-jet printers do not produce enough heat to fuse the ink to the paper, causing it to sit on the surface of the check. The ink is so sticky that when placed in a file, awaiting the statement sorting, they adhere to the check in front, causing jams in the high-speed sorter and poor customer service in that someone elseís checks may get into their statement or vice-versa." Ms. Williams continued, "It is quite easy to use a piece of scotch tape to lift off the amount or the payee and most customers donít realize they are making it easier for someone to alter their checks." Before the ink is even dry on the upcoming BAI report on the subject (sorry for the pun) banks are already discussing surcharging accounts when their checks will not process electronically.
There are a number of companies that offer the software products which create checks right down to a logo, your bank information, and the MICR account line. Even if produced on a laser quality printer and with a MICR toner cartridge, most of these checks contribute to the problem, because the ink does not permeate the paper, as is the case in commercially printed checks.
To test the concept, we purchased a variety of software commonly available to consumer households and produced a large sample of checks, which were then cleared throughout the country. The results were interesting. All checks cleared our account, but more slowly than their commercially printed counterparts paid to the same payee. When non-MICR ink was used, 2% of the items cleared one day later, and 3% cleared two days later. In addition ALL checks came back to our bank in jackets, with the payee bank forced to encode the item electronically. Not a single item appeared on our bank statement with the check number, which created some difficulty in bank reconciliation, and 2% of the items cleared as EFT items rather than checks.
For now, banks are looking at the problem and planning, in many cases, to charge customers who create too many encoder rejects. One of the long-term problems is that the payee bank will often do all the work, and experience all the problems, but has no way to charge the payer for bad printing. In the meantime some banks, such as First Union Bank, are publishing "Check Printing Guidelines" however, they do not have a clue yet how to handle the problem on transit items.
