Winn Varootbangkul
Analyst
Payment and Debt Instruments Department
THE NEW cheque clearing system has been developed by the Bank of Thailand (BOT) with the objectives to replace the current system which is already outdated and to enhance the capacity of cheque clearing and settlement processes.
The new system - the Imaged Cheque Clearing and Archive System (ICAS) - utilises imaging technology to achieve fast and efficient cheque clearing process. Originally, physical cheques are required to be transported between depositary banks and paying banks for verification procedures before making payments, in which the process consumes high operating and transportation costs.
Upon the deployment of the ICAS, verifications are allowed to be performed on cheque images, in which each cheque is represented by three cheque images. The first is a grayscale image of the front of the cheque, while the second and the third are black and white images of both the front and the back of the cheque. The greyscale image is intended for fraud detection as small changes in colour and contrast are visible in this mode. On the other hand, the black and white images are meant for verifications of handwritten information (e.g. signature) as the content is more legible due to the clear-cut differences between black and white colours.
In the ICAS, cheque images are sent via highly-secured online system, thus, allowing the cheque clearing process to be truncated by having physical cheques stored at the depositary banks. Consequently, the cost of transportation may be eliminated and the operating time of the cheque counter may be extended.
To ensure the security of the system, the ICAS utilises a mathematical formula called 'hash function' to derive 'hash values' that are used to detect changes in data, ensuring that the data are complete and no modifications have been made. Digital signatures are also applied in order to identify the entities responsible for creating and transmitting the data. Furthermore, data transmission channels in the ICAS are encrypted for privacy.
Cheque drawers are discouraged from using seals, embossed seals, and coloured seals not only because the cheque images do not facilitate embossment and colour verifications but also due to deterioration in image quality. The absence of the mentioned seals would not increase the level of risks exposed to cheque drawers as technology nowadays enables seals to be easily duplicated. In addition, it is crucial for cheque images to be archived at their best quality in the ICAS as they may serve as legal evidence.
In many countries, imaging technology has been implemented in cheque clearing industry as its benefits are well-recognised. During the past decade, countries like Singapore, Hong Kong, Sri Lanka, USA, India, and Malaysia have adopted cheque imaging technology. The BOT has also developed the ICAS by adopting the models from successfully-implemented systems of different countries.
At present, the BOT is in close collaborations with banks to complete the rules and regulations along with the banks' systems to support the ICAS. The ICAS is scheduled to launch within 2011.
(The views expressed in this column are the writer's own.) Published in the Nation on Monday, May 23, 2011 Source: Bank of Thailand