Ramifications of MICR Mismatch in Check Image Exchange

Data errors made during the check truncation and exchange process are creating privacy and operational risks to the financial institutions involved in Check 21 check clearing. With a one year 320% growth rate in the volume of checks exchanged electronically, the incidence of these data errors has also grown astronomically.  Financial institutions are now feeling the pain of these issues.

There are multiple problems in Check Image Exchange which include:

• Banks’ customers researching their check deposits are seeing images of other customers’ checks
• Banks cannot determine where to return a check that has a wrong image
• Checks are posted to wrong accounts or without a corresponding image
• Checks are routed to the wrong banks
• Unusable check images are clearing on IRD or via Image Exchange
• Banks are needing to manually repair account numbers that are missing or have errors

The root causes of many of these problems are the errors in the MICR data at the time of original check scanning.

Additional problems are caused by creation of IRDs or CRDs from the transaction database. Frequently this database has an incorrect or incomplete record of the original MICR line data. An IRD or a CRD of a check must have an exact copy of the original check MICR line.   Probably the worst error occurs when the process associates the wrong check image with the MICR data. These problems result in serious privacy issues and operational risks.  The white paper: Ramifications of MICR Mismatch in Check Image Exchange will help the users of the check payment system understand these problems, how they occur, and what can be done to minimize the risks of them happening.