ItemProcessingGlossary ABA ABA Institution Identifier American Bankers Association [appearing in the upper right-hand corner of a check as the

numerator (upper portion) of a fraction] a unique identifying number assigned by the American Bankers Association (ABA) under the national numerical system to facilitate the sorting and processing of checks !t has t"o parts# separated by a hyphen $he first part identifies the city# state# or territory in "hich the bank is located $he second part identifies the bank itself (%ee# e g # [Francis and Siegel, 2001].) The ABA Institution Identifier was formerly known as the ABA transit number. & a deposit account at a bank (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) a relationship involving a credit established under a particular name, usually by deposit or loan. (%ee# e g # [Francis and Siegel, 2001].) A record of financial transactions for an asset or indi)idual# such as at a bank# brokerage# credit card company# or retail store (%ee# eg# InvestorWords.com Investing Glossary.) an arrangement bet"een a buyer and a seller in "hich payments are to be made in the future (%ee# e g # InvestorWords.com Investing Glossary.) an accounting entry to correct errors on cash letters or checks (See, e.g., [Accredited Standards Committee X9, 2003b].) a change# or a description of a change# that has been made to sho" a detected error in "ork that has been processed (%ee# e g # [!B+# &,,-] )

account

'

ACH adjustment

automated clearing house &

'

advice

&

A "ritten form or )erbal order from "hich an electronic entry can be posted to an account (that is# a credit or debit ad)ice) ' A "ritten ackno"ledgment or notice of a particular transaction (%ee# e g # [!B+# &,,-] ) the bottom edge of a document when its face is viewed (See, e.g., [Accredited Standards Committee X9, 2003b].) Item Processing Glossary - 1

aligning edge

altered check

a check in "hich a physical or chemical change has been made# e g # a change in the payee# or in the amount (%ee# e g # [Francis and Siegel, 2001], pages 102 103.) a .ashington / 0 based association# founded in &1-2# that represents banks of all si3es on issues of national importance for financial institutions and their customers $he ABA brings together all categories of banking institutions# including community# regional# and money center banks# and holding companies# as "ell as sa)ings associations# trust companies# and sa)ings banks (%ee# e g # [Francis and Siegel, 2001].) a se)en bit code adopted as a standard to represent specific data characters in computer systems# and to facilitate interchange of data bet"een )arious machines and systems 4ro)ides &'1 possible characters# the first (' of "hich are used for printing and transmission control %ince common storage is an 1-bit byte ['25 possible characters] and A%0!! uses only &'1# the e6tra bit is used to hold a parity bit or create special symbols (%ee Glossary of Computerized System and Software Development Terminology.) American 7ational %tandards !nstitute Placement and Location of Magnetic Ink Printing (MICR) ([Accredited Standards Committee X9, 1999b]) 4aper %pecification for 0hecks ([Accredited Standards Committee X9, 1998]) See, also, X9.100-10. 4rint and $est %pecification for +agnetic !nk 4rinting (+!08) ([Accredited Standards Committee X9, 2000]) Bank 0heck Background and 0on)enience Amount 9ield ([Accredited Standards Committee X9, 1999a]) :nderstanding and /esigning 0hecks area of interest (See, e.g., [Accredited Standards Committee X9, 2003b].) application program interface

American Bankers Association

American Standard Code for Information Interchange

ANSI ANSI X9.1 !1999 ANSI X9.1"!199" ANSI X9.#$!#%%% ANSI X9.$!1999 ANSI X9&'(!#!199) AOI API

Item Processing Glossary - 2

application program interface

The interface (calling conventions) by which an application program accesses operating system and other services. An API is defined at source code level and provides a level of abstraction between the application and the kernel (or other privileged utilities) to ensure the portability of the code. An API can also provide an interface between a high level language and lower level utilities and services which were written without consideration for the calling conventions supported by compiled languages. In this case, the APIs main task may be the translation of parameter lists from one format to another and the interpretation of call-by-value and call-by-reference arguments in one or both directions. (See Free On-Line Dictionary of Computing.)

area of interest

[in the conte6t of check processing] a rectangular area ; '2; inch (5 (2mm) high ha)ing the length of each particular field for the four essential data elements< date# signature# amount in "ords and payee (See, e.g., [Accredited Standards Committee X9, 2003b].) American %tandard 0ode for !nformation !nterchange an independent examination of a work product or set of work products to assess compliance with specifications, standards, contractual agreements, or other criteria ([IEEE, 1990]) e6amining a document in an attempt to conclude if it is genuine (See, e.g., [Accredited Standards Committee X9, 2003b].) a computer-based clearing and settlement facility for the interchange of electronic debits and credits among financial institutions Basically acts as an intermediary that clears transactions through t"o or more financial institutions# similar to the 9ederal 8eser)e system (See, e.g., Automated Financial Solutions ACH and EFT Glossary.) [in the conte6t of check processing] the process of restarting an interrupted entry "ithout ha)ing to find and rebatch any items (%ee# e g # [!B+# &,,-] )

ASCII audit

authenticate

automated clearing house

automatic restart

Item Processing Glossary - 3

availa*ilit+ schedule

a listing of bank ABA !nstitution !dentifiers # each of "hich (or group of "hich) is assigned a certain number of days= a)ailability 9rom this a)ailability schedule# the bank kno"s "hen the funds "ill be made a)ailable to the bank corner of checks as the numerator (upper portion) of a fraction (%ee# e g # [Francis and Siegel, 2001].) the amount of funds in an account (%ee# e g # [Francis and Siegel, 2001].) & performing a set of actions necessary to determine the amount of funds in an account# and>or some other measure of the funds associated "ith an account (e g # the collected balance# or the book (ledger) balance) (%ee# e g # [Francis and Siegel, 2001].) ' $he act of bringing t"o sets of related figures into agreement# for e6ample# accumulated detail totals equal input control totals (%ee# e g # [!BB+# &,,-] ) (%ee# also# proofing )

*alance *alancing

Item Processing Glossary - 4

bank

1. a business that provides financial services to consumers and businesses. The basic services that a bank provides include: checking accounts savings accounts and time deposits loans

basic cash management services, e.g., check cashing, and foreign currency exchange Banking institutions include: Commercial banks Savings and loan associations Savings banks

Credit unions (See, e.g., MSN Encarta: Banking.) 2. Any financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or safeguards money for its customers. (See, e.g., MSN Encarta: Banking.) 3. any person located in a state engaged in the business of banking, including any depository institution; and includes: any federal reserve bank any federal home loan bank to the extent that it acts as a payor: the Treasury of the United States the United States Postal Service a state government

a unit of general local government (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) bank of first deposit the first institution, legally chartered or licensed to collect or pay checks deposited by a company or individual, in which a check has been deposited. It is also the institution to which a check would be returned in the event of nonpayment for return to the depositor. Also referred to as the depositary bank. (See, e.g., [Accredited Standards Committee X9, 2003b].)

Item Processing Glossary - 5

*atch

1. a group of documents or transactions assembled for processing? a collection of transactions? in remittance# normally grouped by singles# multiples# coupons only and checks only (%ee# eg# http<>>""" itemprocdirectory com>o)er)ie" htm) ' the lo"est required group of documents that has dollar control established by a control document A batch normally consists of 2;; or fe"er documents (%ee# e g # [!B+# &,,-] ) Accompanying the cash letter# it acts as an offset entry (credit) to the listed checks (%ee# e g # [Francis and Siegel, 2001].) the number assigned to a batch of items being processing through the document processor (%ee# e g # http<>>""" itemprocdirectory com>o)er)ie" htm ) a control document "hich represents to a group of items (%ee http<>> """ itemprocdirectory com> ) A standard against which measurements or comparisons can be made ([IEEE, 1990]) an unconditional order issued by a person or business which directs the recipient to pay a fixed sum of money to a third party at a future date. The future date may be either fixed or negotiable. A bill of exchange must be in writing and signed and dated. (%ee# e g # InvestorWords.com Investing Glossary.) & ' a prime pass control le)el consisting of one or more batches (%ee# e g # [!B+# &,,-] ) "ork from a specified source (%ee# e g # [!B+# &,,-] )

*atch header

*atch num*er

*atch ticket benchmark *ill of e,change

*lock

board

the Board of @o)ernors of the 9ederal 8eser)e %ystem (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003 . See also The Federal Reserve Board.) bank of first deposit [also kno"n as the ledger balance] the amount of funds left in an account after debits and credits ha)e been posted (%ee# e g # [Francis and Siegel, 2001].) [in the context of check processing] a physical package used for storage and transporting checks. A typical box holds about 3000 checks. The box total also may serve as an additional control total on the cash letter listing. ([Accredited Standards Committee X9, 2003b]) Item Processing Glossary - 6

BOFD *ook *alance

*o,

*ulk filing *undle

a method of filing checks in bundles that are sorted by statement cycle (%ee# e g # [Francis and Siegel, 2001].) [in the context of check processing] a subset of a cash letter usually containing about 300-400 checks. The dollar amount of the bundle serves as a control total and is listed on the cash letter. ([Accredited Standards Committee X9, 2003b]) a control document used in a transit kill pocket to delimit a bundle (%ee http<>> """ itemprocdirectory com> ) any day other than a %aturday# %unday# or legal holiday (%ee Expedited Funds Availability Act.) 1. a binary string of length 1 A byte is represented by a he6adecimal string of length ' $he first he6adecimal digit represents the four most significant bits of the byte $he second he6adecimal digit represents the four least significant bits of the byte 9or e6ample# ,/ represents the binary string &;;&&&;& (%ee# e g # [Accredited Standards Committee X9# ';;(a] ) ' A sequence of adAacent bits# usually eight# operated on as a unit by a computer (%ee Dictionary.com ) [in the context of check processing] con)enience amount & to check# adAust# or determine by comparison "ith a standard ' to determine the caliber of something (e g # a tube# or a gun) ( to make corrections in# or to other"ise purposefully adAust * to determine or rectify the graduation of# as of the )arious standards or graduated instruments (%ee# e g # Dictionary.com ) & the setting or correcting of a measuring de)ice or base le)el# usually by adAusting it to match or conform to a dependably kno"n and un)arying measure (Whatis.com) 2. the act of checking or adAusting (by comparison "ith a standard) the accuracy of a measuring instrument (TheFreeDictionary.com)

*undle cut ticket business day byte

CA cali*rate

cali*ration

Item Processing Glossary - 7

capture

1. the gathering of data from the check MICR line during machine processing or manual methods to enable funds represented by the check to move between financial entities (See, e.g., [Accredited Standards Committee X9, 2003b].) 2. the acquisition of replicas (e.g., on film, or in the form of digital files) of the front and back of a paper check, data from the checks MICR line, and any associated parameters required to interpret the replicas [in the context of check processing] convenience amount recognition any instruction to pay a sum fixed in money to a third party (See, e.g., [Accredited Standards Committee X9, 2003b].) a group of checks sent by a bank or its agent to another bank, a clearinghouse, or a Federal Reserve office. A cash letter contains a number of negotiable items, usually checks, accompanied by a transmittal letter that lists the dollar totals of the check bundles. (See, e.g., [Accredited Standards Committee X9, 2003b].) a listing that summari3es bundles by gi)ing dollar and item controls for each bundle (%ee# e g # [!B+# &,,-] ) a ticket used by a teller as a substitute document for cash recei)ed in a deposit (%ee# e g # [Francis and Siegel, 2001].) gi)ing cash for a check dra"n on another bank (%ee# e g # [Francis and Siegel, 2001].) A ticket used by a teller to balance a deposit "hen cash is gi)en to the customer# or "hen checks are cashed (%ee# e g # [Francis and Siegel, 2001].) collecting bank 1. validating the authenticity of something or someone 2. a document attesting to the truth of certain stated facts ( the act of certifying

CAR cash item

cash letter

cash letter summar+ cash!in ticket

cashing a check cash!out ticket

CB certification

Item Processing Glossary - 8

check

&

'

any payment document "ritten against an account maintained by a financial institution for the transfer of a dollar amount from one party to another $he term includes )ariable-amount payment documents# such as personal checks# business checks# go)ernment checks# and drafts in paper form# issued by a financial institution# directing the payment of a fi6ed sum of money to a third party ([Accredited Standards Committee X9, 1995]) a draft# payable on demand and dra"n on or payable through or at an office of a bank# "hether or not negotiable# that is handled for for"ard collection or return# including a substitute check and a tra)elers check [$his definition] does not include a noncash item or an item payable in a medium other than :nited %tates dollars (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.)

check carrier envelope

a transparent or translucent envelope designed to contain foreign, oversize, severely damaged, or non-magnetically encoded checks, with provision for adding a magnetic code line in order to make the document processable (See, e.g., [Accredited Standards Committee X9, 2003b].) [also known as check payment system] the series of processing steps performed on a check from initial deposit though return to the maker of the check. These steps include: deposit into a financial institution; capture; forwarding through intermediary collection points; capture and posting at the drawee institution; and any additional sorting required prior to rendering a statement to the maker of the check. (See, e.g., [Accredited Standards Committee X9, 2003b].) [also kno"n as the 9ederal 8eser)e routing symbol] the lo"er portion (denominator) of a fraction that appears in the upper right-hand corner of a check 0onsisting of four digits# the check routing number identifies the 9ederal 8eser)e district in "hich the dra"ee is located# the 9ed facility through "hich the check can be collected# and the a)ailability assigned to the check under the 9ed schedule ($he upper portion (numerator) of the fraction is the ABA !nstitution !dentifier ) (%ee# e g # [Francis and Siegel, 2001].) 0learing Bouse !nterbank 4ayments %ystem Item Processing Glossary - 9

check processing system

check routing s+m*ol

CHI-S

clearing

$he process or method by "hich checks and>or other point of sale transactions are mo)ed# either physically or electronically# from the point of origin to the bank or other financial institution that maintains the customer=s account record (%ee [0ompton# &,1(] ) the 9ed or correspondent bank offering check collection ser)ices (%ee# e g # [Francis and Siegel, 2001].) the )arious methods of presenting checks to the dra"ee bank (%ee# e g # [Francis and Siegel, 2001].) an organi3ation of commercial banks in a city or region# established for the purpose of facilitating the clearance of checks "ritten on accounts in the participating banks (%ee# e g # [Francis and Siegel, 2001].) an automated clearing house operated by the 7e" Cork 0learing Bouse Association# used for interbank funds transfers for international customers 0B!4% handles large-dollar payment acti)ity for thousands of accounts around the "orld and facilitates the settlement of international transactions (%ee# e g # [Francis and Siegel, 2001].) a method by "hich a computer system controls items on a detail le)el by comparing internal data records read from a prior pass "ith data read from the item on the current pass 0ode-line data matching occurs on subsequent operations (%ee# e g # [!B+# &,,-] ) the book balance less float (%ee# e g # [Francis and Siegel, 2001].) any bank handling a check for collection except the paying bank (See, e.g., H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) a discipline applying technical and administrative direction and surveillance to 1. identify and document the functional and physical characteristics of a configuration item, 2. control changes to those characteristics, 3. record and report change processing and implementation status, and 4. verify compliance with specified requirements. ([IEEE, 1990])

clearing agent clearing alternatives clearing house

Clearing House Inter*ank -a+ments S+stem

code!line data matching

collected *alance collecting bank

configuration management

Item Processing Glossary - 10

consumer

&

an indi)idual "ho# "ith respect to a check handled for for"ard collection# dra"s the check on a consumer account ' an indi)idual "ho# "ith respect to a check handled for return# deposits the check into# or cashes the check against# a consumer account (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) any account used primarily for personal# family# or household purposes (%ee Expedited Funds Availability Act.) 1. that which surrounds, and gives meaning to, something else 2. the circumstances or setting in which an event occurs, or in which an item exists 3. the set of facts or circumstances that surround a situation or event 4. discourse that surrounds a language unit and helps to determine its interpretation (See, e.g., Dictionary.com.) the difference in luminance bet"een light and dark areas of an image 0ontrast is usually e6pressed as a ratio a storage area that a computer program uses to hold control information (%ee# e g # [!B+# &,,-] ) an encoded document that contains control information# such as the monetary amount of the checks that the document controls# the source of the checks# and a code that describes the le)el of control (%ee# e g # [!B+# &,,-] ) an encoded document that contains control information (the amount of the items that the document controls and the source of the items) and a code describing the le)el of the control (%ee# e g # [!B+# &,,-] ) the total dollar )alue or item count for a group of documents (%ee# e g # [!B+# &,,-] ) the value of the check expressed in numbers, located within the convenience amount rectangle (See, e.g., [Accredited Standards Committee X9, 2003b].) a technology used to automate encoding of the dollars and cents amount in the MICR line of the check (See, e.g., [Accredited Standards Committee X9, 2003b].)

consumer account

conte,t

contrast control *lock control document

control sli.

control total convenience amount

convenience amount recognition

Item Processing Glossary - 11

convenience amount recognition convenience amount rectangle convenience amount scan area

[in the context of check processing] an image recognition technology used to automate encoding of the dollars and cents amount in the MICR line of the check an area within the convenience amount scan area which contains the convenience amount (See, e.g., [Accredited Standards Committee X9, 2003b].) the rectangular area on the right side of a check, which contains the convenience amount rectangle and its associated clear area (See, e.g., [Accredited Standards Committee X9, 2003b].) a bank that has truncated the original check or substitute check to a digital image 4referred term< $runcating Bank & a bank that maintains an account relationship and>or engages in an e6change of ser)ices "ith another bank (%ee# e g # [Francis and Siegel, 2001].) an institution# acting on behalf of other institutions# that can settle the checks they collect for other institutions (respondents) by using accounts on their books or by sending a "ire transfer @enerally# a pro)ider of banking and payment ser)ices to other financial institutions (%ee# e g # FFIEC Information Technology Examination Handbook Glossary )

converting *ank corres.ondent *ank

'

COTS COTS counterfeiting

commercial off-the-shelf commercial off-the-shelf soft"are the creation of a ne" document that is apparently identical or similar to another item in an attempt to perpetrate a fraud ([Accredited %tandards 0ommittee D,# ';;(b]) one of a series of promissory notes of consecuti)e maturities# attached to a bond or other debt certificate# and intended to be detached and presented on their respecti)e due dates for payment of interest (%ee# e g # [0ompton# &,1(] ) %ee convenience amount the degree to "hich a gi)en test or set of tests addresses all specified requirements for a gi)en system or component ([!EEE# &,,;]) an idiom meaning an in-place process, information structure, and/or related infrastructure, that was originally created with little or no analysis or design, usually by following the paths of least resistance 0ertified 4rocessors Fist Item Processing Glossary - 12

cou.on

courtesy amount coverage

cowpath

CPL

credit

&

an ad)ance of cash# merchandise# or other commodity in e6change for a promise or other agreement to pay at a future date# "ith interest# if so agreed ' an accounting entry to the right-hand (credit) side of an account# decreasing the balance of an asset or e6pense account or increasing the balance of a liability# income# or equity account (%ee# e g # [Francis and Siegel, 2001].) Check Truncation Act a person ha)ing an account "ith a bank (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) the financial institution=s designated point for balancing or releasing "ork before processing continues Also# the designated time after "hich the financial institution cannot accept "ork for processing (%ee# e g # [!B+# &,,-] ) & A group of "ork# or an identification of a group of "ork# processed as a single entity ' A con)enient grouping of "ork A cycle normally contains a )ariable number of entries information contained on the check. This data may or may not be legally necessary information. Examples of legally necessary data are: signature, payee name and amount. Examples of not legally necessary data are memo line and serial number. (See, e.g., [Accredited Standards Committee X9, 2003b].) [in the conte6t of check processing] that data element on the face of a check that indicates "hen the check becomes payable (%ee# e g # [Dunn and Raskovich, 2003].) demand deposit account & an accounting entry that increases the balance of an asset or e6pense account or decreases the balance of a liability# income# or equity account ' a charge against a customer=s balance or bank card account (%ee# e g # [Francis and Siegel, 2001].) the process of restoring compressed data to its original form? essentially the in)erse operation to compression (%ee# e g # [Accredited Standards Committee X9, 1997a].) Item Processing Glossary - 13

CTA customer

cutoff

c+cle

data elements

date

//A de*it

decompression

defect

1. a condition, component, or lack thereof, that

causes inadequacy or failure 2. an improper combination of components, and/or conditions, that results in inadequacy or failure
3. a failing, fault, imperfection, deficiency, or blemish 4. a flaw in a system or system component that causes the system or component to fail to perform its required function. A defect, if encountered during execution, may cause a failure of the system. ([Paulk et al., 1993]) defect density the number of defects identified in a product divided by the size of the product component (expressed in standard measurement terms for that product) ([Paulk et al., 1993]) the activities involved in identifying defects or potential defects and preventing them from being introduced into a product. ([Paulk et al., 1993]) funds that may be "ithdra"n from a bank "ithout ad)ance notice 0hecking account deposits are the most common form of demand deposits (%ee# e g # [Francis and Siegel, 2001].) an account for "hich deposits are payable on demand# dra"n against by checks# and no notice of "ithdra"al is required (%ee# eg# http<>>""" itemprocdirectory com>o)er)ie" htm ) any placement of cash# checks# or other drafts "ith a bank for credit to an account All deposits are liabilities of a bank# since they must be repaid in some form at some future date (%ee# e g # [0ompton# &,1(] ) a document that conforms to the size and MICR printing requirements for checks, and which is used at a depository institution to list each item of deposit and total the net amount to be credited to the account holder. ([Accredited Standards Committee X9, 2003b]) & the first bank to "hich a check is transferred# e)en if such bank is also the paying bank or the payee ' a bank to "hich a check is transferred for deposit in an account at such bank# e)en if the check is physically recei)ed and endorsed first by another bank (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) Item Processing Glossary - 14

defect prevention

demand de.osit

demand de.osit account

de.osit

de.osit ticket

depositary bank

de.ositor+ financial institution depository institution

a financial institution that accepts deposits and channels the money into lending acti)ities (%ee# e g # TheFreeDictionary.com.) & any insured bank as defined in section ( of the 9ederal /eposit !nsurance Act or any bank "hich is eligible to make application to become an insured bank under section 2 of such Act ' any mutual sa)ings bank as defined in section ( of the 9ederal /eposit !nsurance Act or any bank "hich is eligible to make application to become an insured bank under section 2 of such Act ( any sa)ings bank as defined in section ( of the 9ederal /eposit !nsurance Act or any bank "hich is eligible to make application to become an insured bank under section 2 of such Act * any insured credit union as defined in section &;& of the 9ederal 0redit :nion Act or any credit union "hich is eligible to make application to become an insured credit union pursuant to section ';& of such Act 2 any member as defined in section ' of the 9ederal Bome Foan Bank Act 5 any sa)ings association (as defined in section ( of the 9ederal /eposit !nsurance Act) "hich is an insured depository institution (as defined in such Act) or is eligible to apply to become an insured depository institution under the 9ederal /eposit !nsurance Act - for the purpose of section &( and the fourteenth paragraph of section &5# any association or entity "hich is "holly o"ned by or "hich consists only of institutions referred to in clauses (&) through (5) (%ee Federal Reserve Act and Federal Deposit Insurance Act.) depository financial institution a digital representation of all or part of a physical item, including any associated parameters required to interpret the digital representation. The digital representation is created by sensing light reflected from the item. (See, e.g., [Accredited Standards Committee X9, 2003b].) the method of check collection# also called direct sending# in "hich deposited checks are presented directly to their dra"ee banks for settlement (%ee# e g # [Francis and Siegel, 2001].)

/0I digital image

direct .resentment

Item Processing Glossary - 15

document 12IC34

any printed item# including but not limited to checks# "hich conforms to all applicable +!08 standards (See, e.g., [Accredited Standards Committee X9, 2003b].) & a cumulati)e effect produced "hen one e)ent initiates a succession of similar e)ents (%ee Merriam Webster !n"ine ) 2. series of related e)ents< an ine)itable succession of related and usually undesirable e)ents# each caused by the preceding one (%o called because dominoes set up in a ro" fall in sequence once the first has fallen) (%ee Encarta Dictionaries.) A signed# "ritten order by "hich one party (the dra"er) instructs another (the dra"ee) to make payment to a third (the payee) !n international banking# also called bill of e6change (%ee# e g # [Francis and Siegel, 2001].) the party to whom the drawee issues instructions to make payment. In the case of checks, the drawee is a bank or other financial institution. (See, e.g., [Francis and Siegel, 2001].) the party "ho gi)es the order to pay the draft (%ee# e g # [Francis and Siegel, 2001].) an element, which is intended to be human readable, but which may not be captured by machine reading systems (See, e.g., [Accredited Standards Committee X9, 2003b].) a special type font consisting of ten numerals and four special symbols, developed for magnetic ink character recognition (See, e.g., [Accredited Standards Committee X9, 2003b].) E6tended Binary 0oded /ecimal !nterchange 0ode Electronic 0heck 0learing Bouse Grgani3ation elliptical cur)e digital signature algorithm electronic check exchange the institution that creates and sends the electronic cash letter information (See, e.g., [Accredited Standards Committee X9, 2003b].) the condition where fewer inputs such as effort and time are needed to produce greater quantities of a single output (A Framework for Software Product Line Practice, Version 3.0) Item Processing Glossary - 16

domino effect

draft

dra5ee

dra5er dropout element

E-13B

6BC/IC ECCHO 6C/SA ECE ECE institution

economies of scale

economies of scope

the condition where fewer inputs such as effort and time are needed to produce a greater variety of outputs. Greater business value is achieved by jointly producing different outputs. Producing each output independently fails to leverage commonalities that affect costs. Economies of scope occur when it is less costly to combine two or more products in one production system than to produce them separately. (A Framework for Software Product Line Practice, Version 3.0) electronic check presentment Electronic 0learing %er)ices a "orking group "ithin Electronic 0learing %er)ices# "ithin %H40o# charged "ith in)estigating and defining issues related to check images and their associated technologies (e g # image capture# image e6change# and image quality) 1. knowledge acquired by learning and instruction 2. activities that impart knowledge 3. the result of educating, as determined by the knowledge, skill, or discipline of character, acquired (See Dictionary.com.) E6pedited 9unds A)ailability Act electronic funds transfer a generic term designating an end-to-end negotiable instrument that has only existed in an electronic form. (See, e.g., [Accredited Standards Committee X9, 2003b].) a not-for-profit national clearinghouse that is owned by its member banks. Formed in 1990, its primary objective is the development and promotion of electronic check presentment (ECP). ECCHO member banks holding companies have approximately $2.4 trillion in deposits. (See, e.g., http://www.eccho.com/)

ECP ECS 6CS Image 'ask 0orce

education

60AA 60' electronic check

Electronic Check Clearing House Organization

electronic check exchange the electronic exchange of check-related data, in lieu of, or in addition to, the exchange of paper checks. For forward presentment, usually referred to as electronic check presentment (ECP). (See, e.g., [Accredited Standards Committee X9, 2003b].)

Item Processing Glossary - 17

electronic check .resentment

&

'

the transmission of the +!08 line of checks by a presenting bank to the paying bank (%ee# e g # [Francis and Siegel, 2001].) a check truncation methodology in "hich the paper check=s +!08 line information is captured and stored electronically for presentment $he physical checks may or may not be presented after the electronic files are deli)ered# depending on the type of E04 ser)ice that is used (%ee# e g # FFIEC Information Technology Examination Handbook Glossary )

electronic data interchange

a method of e6changing information as data# formatted for computer processing# rather than formatted as humanreadable documents E/& has been standardi3ed in 7orth America by the A7%! Accredited %tandards body Dl' and at the international le)el by !%G>!E0 $0 &2* (E/!9A0$) & a generic term describing any transfer of funds bet"een parties or depository institutions )ia electronic data systems ' a generic term used "hene)er money is mo)ed "ithout the use of a check or draft ( any transfer of funds bet"een accounts using an electronic terminal# telephone# computer# or magnetic tape and that does not use checks or other paper * transfer of funds electronically rather than by check or cash $he 9ederal 8eser)eIs 9ed"ire and automated clearinghouse ser)ices are E9$ systems (%ee# e g # Payment, Security & Internet References, Lynn Wheeler.) the process of inscribing or imprinting +!08 data on checks# deposit slips# debit and credit tickets# or other bank documents (%ee# e g # [Francis and Siegel, 2001].) information used to transfer a negotiable instrument from one holder to another Endorsements are placed on a document by payee(s)# by the institution of first deposit# and by institutions subsequently handling the document ([Accredited Standards Committee X9, 1996]) the ne6t financial institution to recei)e an item A cash letter can ha)e different endpoints for the same destination (%ee# eg# http<>>""" itemprocdirectory com>o)er)ie" htm ) e6ternal processing code Electronic 4ayments 7et"ork Item Processing Glossary - 18

electronic funds transfer

encoding

endorsement

end.oint

EPC 6-N

error e,change .artner

a situation where an item, concept, or phenomenon does not exhibit the characteristics that its users expect of it. a bank (or other financial institution) that has one or more agreements "ith another bank (or financial institution) to share information# on a specific electronic check e6change Each such bank is referred to as an e6change partner of the other(s) a portion ($itle !H) of the 0ompetiti)e Equality Banking Act of &,1- that requires financial institutions to make deposited funds a)ailable for "ithdra"al "ithin certain time limits $his act "as implemented by the 9ederal 8eser)e=s 8egulation 00 (%ee# e g # [Francis and Siegel, 2001].) a group of coded character sets used on mainframes that consist of 1-bit coded characters EB0/!0 coded character sets reser)e the first 5* code positions (6;; to 6(9) for control codes# and reser)e the range 6*& to 69E for graphic characters $he English alphabetic characters are in discontinuous segments "ith uppercase at 60& to 60,# 6/& to 6/,# 6E' to 6E,# and lo"ercase at 61& to 61,# 6,& to 6,,# 6A' to 6A, (%ee #nicode Glossary ) an +!08 digit# "hich con)eys special information regarding the correct handling or routing of a check or check data to financial institutions and other processors ([Accredited %tandards 0ommittee D,# ';;(b]) [in the context of financial document imaging] the surface of the check that bears the amount, payee, payor, bank name, signature, etc. The surface of a strip that is intended to be MICR encoded. (See, e.g., [Accredited Standards Committee X9, 2003b].) the adjudged or hypothesized cause of an error 1. the assessment of capability of being completed 2. the possibility, probability and suitability of accomplishment (Wideman Comparative Glossary of Project Management Terms)

6,.edited 0unds Availa*ilit+ Act

6,tended Binar+ Coded /ecimal Interchange Code

external processing code

face

fault feasibility

Item Processing Glossary - 19

feasibility study

1. the methods and techniques used to examine technical and cost data to determine the economic potential and the practicality of project applications. It involves the use of techniques such as the time value of money so that projects may be evaluated and compared on an equivalent basis. Interest rates, present worth factors, capitalization costs, operating costs, depreciation, and so forth are all considered. 2. a study to examine the viability of taking on a project 3. analysis to determine if a course of action is possible within the terms of reference of the project (Wideman Comparative Glossary of Project Management Terms) [also kno"n as the 9ed] $he organi3ation created by the &,&( 9ederal 8eser)e Act $he system includes &' 9ederal 8eser)e Banks and their branches# plus the member banks "hich are its legal o"ners $he Board of @o)ernors# headquartered in .ashington# / 0 # e6ercises o)erall control o)er the nation"ide operations of the 9ederal 8eser)e %ystem (%ee# e g # [0ompton# &,1(] ) an organi3ed and structured collection of stored data that may (or may not) be transmitted# recei)ed# modified# created# and>or deleted as a unit a payment such that the bank making the payment is fully accountable for the amount of the item# i e # the bank cannot later decide to dishonor and return the item (%ee# e g # [Francis and Siegel, 2001].) +!08 line data and other data associated "ith a check transaction required for the presentation and settlement of the item(s) (%ee# e g # [Accredited Standards Committee X9, 1997a].) the e6change of digiti3ed electronic images of financial documents# e g # checks# among the different financial institutions in)ol)ed in a payment transaction (%ee# e g # [Accredited Standards Committee X9, 1997a].) an institution "hich collects funds from the public and places them in financial assets# such as deposits# loans# and bonds# rather than tangible property (%ee# e g # InvestorWords.com Investing Glossary.)

0ederal 3eserve S+stem

file

final .a+ment

financial data

financial image interchange

financial institution

Item Processing Glossary - 20

Financial Services Technology Consortium

a consortium of leading North American-based financial institutions, technology vendors, independent research organizations, and government agencies. FSTC sponsors collaborative technology developmentpilots, proofs-of-concept, tests, and demonstrationssupported by member financial institutions and technology companies. Its aim is to bring forward interoperable, open-standard technologies that provide critical infrastructures for the financial services industry. (See http://www.fstc.org/) the dollar amount of deposited cash items that ha)e been gi)en immediate# pro)isional credit but are in the process of collection from dra"ee banks Also called uncollected funds corner of checks as the numerator (upper portion) of a fraction (%ee# e g # [Francis and Siegel, 2001].) the transfer by a bank of a check to a collecting bank for settlement or the paying bank for payment (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) 9ederal 8eser)e Bank Financial Services Technology Consortium the endorsement placed on a document by the institution of first deposit $his endorsement includes the nine-digit routing number# date# institutionIs name>location# trace>sequence number and branch $he full endorsement "ill also include the arro" points at each end of the nine-digit routing number (See, e.g., [Accredited Standards Committee X9, 2003b].) the consolidated# summary books of account for an entire bank $he general ledger unit records all changes in the bank=s financial condition and pro)ides the material for a all call reports and published statements of condition All subsidiary ledger figures# such as branch and departmental totals# are bought together in the general ledger (%ee# e g # [0ompton# &,1(] ) : % Bouse of 8epresentati)es )ersion of the 0heck $runcation Act of ';;( (%ee# e g # 5 Versions of Bill Number H.R. 1474 Before Congress and H.R. 1474.EAS, Check Truncation Act of 2003.) a restriction on payment of all or any part of the balance in an account (%ee# e g # [Francis and Siegel, 2001].) !mage Archi)e 9orum Item Processing Glossary - 21

float

forward collection

FRB FSTC full endorsement

general ledger

H.R. 1474 [108th Congress]

hold IA0

IC7 IC73 ICR I6'0 incoming return items

image cash letter image cash letter (returns) intelligent character recognition & ' !nternet Engineering $ask 9orce !mage E6change $ask 9orce

checks# drafts# and other instruments that are recei)ed by the depositary bank to be charged back to depositors= accounts (%ee# e g # [Francis and Siegel, 2001].) a bank that is pro)iding an indemnity under section 5 "ith respect to a substitute check (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) 1. An underlying base or foundation especially for an organization or system ' $he basic facilities# ser)ices# and installations needed for the functioning of a community or society# such as transportation and communications systems# "ater and po"er lines# and public institutions including schools# post offices# and prisons ([American Heritage, 2000]) Dictionary.com notes that: The term infrastructure has been used since 1927 to refer collectively to the roads, bridges, rail lines, and similar public works that are required for an industrial economy, or a portion of it, to function. The term also has had specific application to the permanent military installations necessary for the defense of a country. Perhaps because of the word's technical sound, people now use infrastructure to refer to any substructure or underlying system.

indemnifying bank

infrastructure

Item Processing Glossary - 22

instrument

&

!n general# any financial security such as a bond# stock# check# etc +oney market securities (such as $reasury Bills# : % go)ernment bonds# or commercial paper) and capital market securities (such as mortgages# certificates of deposit# or long-term bonds) are also referred to as instruments ' A document containing some legal right or obligation E6amples include notes# agreements# and contracts ( Any tool that can be used in order to implement economic policy 9or e6ample# the go)ernment may use interest rates as an instrument for implementing monetary policy# and ta6es as an instrument for implementing fiscal policy (%ee# e g # In$estorWords.com ) algorithms used to provide character or symbol recognition from the captured or stored image data ([Accredited Standards Committee X9, 2003b]) !nternational Grgani3ation for %tandardi3ation 1. the physical representation of a financial transaction E6amples include checks and related paper obAects such as deposit slips and cash in or cash out tickets $he monetary amounts of items "ill be posted in total# or in detail# as a debit or credit to some account in the bank !tems are generally referred to by their type# as for instance# cash items# transit items# on-us items# clearing items# general ledger items# etc (%ee# e g # [Accredited Standards Committee X9, 1997a].) 2. Any cashed or deposited check# deposit ticket# or other bank-related document captured on an item processor (%ee http<>> """ itemprocdirectory com> ) ( Any check or other financial institution document that has been +!08 encoded a coordinated and integrated set of acti)ities designed to control and other"ise manage items from the time that the items first come under the responsibility and control of the item processing department "ithin a bank (or other financial institution)# until the items are no longer the responsibility of that bank=s item processing department $hese acti)ities typically include< collecting>recei)ing>capturing items (and information about the items)# distributing items# controlling>balancing items# creating and monitoring audit trails for the items# archi)ing the items# and end-of-day item processing

intelligent character recognition ISO item

item .rocessing

Item Processing Glossary - 23

item .rocessor

& '

( joint .a+ee

a machine designed to automate part of the item processing process a person responsible for all or part of the item processing at a financial institution# including# e g # check encoding# managing high-speed check sorting equipment# running transport machines to capture all the transactions processed by a bank=s )arious departments and branches# and proofing of outgoing cash letters an organi3ation that pro)ides item processing ser)ices

[in the conte6t of check>item processing] a situation "here a check is payable to t"o or more payees !n some such situations# the check may only require the endorsement of one of the named payees Gther situations may require that all the named payees must endorse the check for it to be properly payable (%ee# e g # [Francis and Siegel, 2001], pages 102 103.) a pocket in a document processor that is assigned to items that are sent and remitted to another bank or destination "ithout further processing (sorting) [in the conte6t of check recognition] acceptance rate legal amount recognition the )alue of the check e6pressed in te6t# also kno"n as the amount in "ords !f this )alue differs from that sho"n in the 0on)enience Amount# the Fegal Amount )alue "ill pre)ail ([Accredited Standards Committee X9, 1995]) [in the conte6t of check processing] the technology that reads and recognizes the handwritten or typed legal (written) amount on checks (See, e.g., Automated Financial Solutions ACH and EFT Glossary.) 1. the quality of a letter or numeral that enables the observer to identify it positively and quickly to the exclusion of all other letters or numerals (From the U.S. Internal Revenue Service. See, e.g., Legal Support of Document Imaging Systems) Note that this definition does not readily address any non-alphanumeric character information (e.g., whitespace, punctuation, diacritical marks, and pictures) 2. the quality of being possible to read or decipher (See Dictionary.com) Item Processing Glossary - 24

kill .ocket

kill rate 7A3 legal amount

legal amount recognition

legibility

legi*ilit+ gauge

a gauge is used to obtain numerical )alues for endorsement print quality $he higher the gage reading step# the greater the legibility of the endorsement ([Accredited Standards Committee X9, 1996]) that "hich is capable of being read or deciphered !nformation that must be of sufficient quality to be )ie"ed and seen easily# accurately# "ithout ambiguity under the conditions specified ([Accredited Standards Committee X9, 1996]) 1. a proposed or enacted law or group of laws 2. a law enacted by a legislative body (See Dictionary.com) [as defined by 8egulation 00 and the E6pedited 9unds A)ailability Act] a deposited check that is dra"n on another bank in the same 9ed check processing region (%ee# e g # [Francis and Siegel, 2001].) a check dra"n on another local bank (%ee# e g # [Francis and Siegel, 2001].) a collection agent# either a bank or third party# used to accelerate the collection of payments (%ee http<>> """ itemprocdirectory com> ) the amount of light that is emitted by a pi6el or by a particular area of a display surface & the American Bankers Association program that pro)ides for encoding of checks and documents "ith standard characters in magnetic ink so that they can be electronically read and processed (%ee# e g # [0ompton# &,1(] ) 2. the encoding of checks and documents "ith characters in magnetic ink so that they can be electronically read and processed (%ee# e g # [Francis and Siegel, 2001].) 3. the common machine language specification for the paper-based payment transfer system !t consists of magnetic ink printed characters of a special design# called the E-&(B font# that can be recogni3ed by high-speed magnetic recognition equipment (%ee# e g # [Accredited Standards Committee X9, 1999b].)

legi*le

legislation

local check

local clearing item lock*o,

luminance magnetic ink character recognition

Item Processing Glossary - 25

measurement

1. an extent, size, capacity, amount, or quantity ascertained by measuring 2. a magnitude as determined by measurement or calculation 3. an accepted or approved instance or example of a quantity or quality against which others are judged or measured or compared (See, e.g., OneLook and Dictionary.com.) 1. a defined unit of measurement 2. a value derived from measuring an item, expressed in terms of a defined unit of measurement magnetic ink character recognition any of the ten numerals or four special symbols comprising the MICR type font known as E-13B (See, e.g., [Accredited Standards Committee X9, 2003b].) a 0.125-inch space in the MICR print band within which one MICR character may appear (See, e.g., [Accredited Standards Committee X9, 2003b].) a horizontal band, 0.625 inch high, on the front and back of the document, measured from the aligning edge, that must be free of any magnetic ink other than that of the E13B font (See, e.g., [Accredited Standards Committee X9, 2003b].) any printed item, including but not limited to checks, which conforms to all applicable MICR standards (See, e.g., [Accredited Standards Committee X9, 2003b].) the numbers# "hich may include the bank routing number# account number# check number# check amount# and other information# that are printed near the bottom of a check in magnetic ink in accordance "ith generally applicable industry standards (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) a 0.250 inch high band, subdivided into a series of character spaces, within the MICR Clear Band, within which E-13B characters are located. (See, e.g., [Accredited Standards Committee X9, 2003b].)

metric

MICR MICR character

MICR character space

MICR clear band

MICR document

MICR line

2IC3 .rint *and

Item Processing Glossary - 26

nomenclature

1. a system of names used in art or science 2. the procedure of assigning names to groups, classes, and individual items 3. a vocabulary, dictionary, or glossary 4. the technical names used in any particular branch of science or art, or by any school or individual 5. a system of words used in a particular discipline 6. legal terminology (See Dictionary.com.) & a check or other demand item to "hich a passbook# certificate# or other document is attached ' a check or other demand item "hich is accompanied by special instructions# such as a request for special ad)ise of payment or dishonor ( any similar item "hich is other"ise classified as a noncash item in regulations of the Board (%ee Expedited Funds Availability Act.) optical character recognition a check cashed or deposited at the same bank on "hich it is dra"n (also called a house check) (%ee# e g # [0ompton# &,1(] ) the +!08 print band area bet"een the closing amount symbol and the opening routing symbol Arrangement of the Gn-:s field is )ariable# specified by the financial institution on "hich the check is "ritten !t may include such information as the userIs account number# a consecuti)e number# and a transaction or processing code (See, e.g., [Accredited Standards Committee X9, 2003b].) the symbol in the E-&(B font# "hich identifies the field(s) containing information unique to the issuing financial institution (See, e.g., [Accredited Standards Committee X9, 2003b].)

noncash item

8C3 on!us check

on!us field

on!us s+m*ol

Item Processing Glossary - 27

optical character recognition

4. a technology that uses optical sensing to achieve machine readability of the E-13B font on MICR documents ([Accredited Standards Committee X9, 2003b]) 5. the technology by which characters and symbols imprinted in non-reflective ink are optically read. An OCR system reads characters by detecting differences in the reflected light from a document as it passes through a hardware reading mechanism. These differences are interpreted by OCR electronics, converted to a binary code, and transferred to the system processor. (See, e.g., Automated Financial Solutions ACH and EFT Glossary.) a 0.300-inch high band that has included within it the MICR print band. This band is located 0.150 inch above the aligning edge and extends the length of the document. (See, e.g., [Accredited Standards Committee X9, 2003b].) checks# drafts# and other instruments returned by the paying bank (%ee# e g # [Francis and Siegel, 2001].) [in the conte6t of check imaging systems] the original document# the image replacement document or an indemnified photocopy ([Accredited Standards Committee X9# ';;(a]) a payment document normally printed on 24 lb. MICR bond (%ee# e g # [Accredited Standards Committee X9# ';;(b] ) an item processing transaction that in)ol)es one or more paper (as opposed to electronic) documents instances in "hich a paper check or other banking document must be for"arded after an image or data detailing the specifics about the check or document already ha)e been transmitted (%ee# eg# http<>>""" itemprocdirectory com>o)er)ie" htm )

optical clear band

outgoing return items paper

paper check

.a.er transaction .a.er!to!follo5

Item Processing Glossary - 28

paradigm

1. one that serves as a pattern or model 2. a set of assumptions, concepts, values, and practices that constitutes a way of viewing reality for the community that shares them, especially in an intellectual discipline Usage Note: Paradigm first appeared in English in the 15th century, meaning an example or pattern, and it still bears this meaning today For nearly 400 years paradigm has also been applied to the patterns of inflections that are used to sort the verbs, nouns, and other parts of speech of a language into groups that are more easily studied. Since the 1960s, paradigm has been used in science to refer to a theoretical framework, as when Nobel Laureate David Baltimore cited the work of two colleagues that really established a new paradigm for our understanding of the causation of cancer. Thereafter, researchers in many different fields, including sociology and literary criticism, often saw themselves as working in or trying to break out of paradigms. Applications of the term in other contexts show that it can sometimes be used more loosely to mean the prevailing view of things. (See Dictionary.com and [Kuhn, 1962]) a single run of documents through an item processor (%ee# eg# http<>>""" itemprocdirectory com>o)er)ie" htm ) an idiom that means re-implementing and/or updating current, in-place processes, information, and related infrastructures, guided largely or solely by the current, in-place processes, information, and related infrastructures. (See, e.g., Governance On Net Time.) [in the conte6t of check processing] the data element on the face of a check that is the name of the party to "hom the check is being paid (%ee# e g # [Accredited Standards Committee X9, 2003b].) the line on a check that pro)ides for the entry of the name of the party to "hom the check is being paid (See, e.g., [Accredited Standards Committee X9, 2003b].) the line on checks that pro)ides for the entry of the name of the party to "hom the check is being paid ([Accredited Standards Committee X9, 1995]) gi)ing cash for an on-us check (%ee# e g # [Francis and Siegel, 2001].) Item Processing Glossary - 29

.ass

paving the cow path

.a+ee

.a+ee area

payee line

.a+ing a check

paying bank

&

the bank by "hich a check is payable# unless the check is payable at or through another bank and is sent to the other bank for payment or collection ' the bank at or through "hich a check is payable and to "hich the check is sent for payment or collection (See, e.g., H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) a proposed or enacted law, or group of laws, that is primarily or partially concerned with the transfer of funds from one legal entity to another a subgroup of the Image Archive Forum, formed to develop a view of the future of check processing using image technology [in the conte6t of check processing] the party issuing a check $he payor is also kno"n as the maker or the "riter (See, e.g., [Accredited Standards Committee X9, 2003b].) the ability of a +!08 image to retain its human and machine readability o)er the normal life cycle of the check (See, e.g., [Accredited Standards Committee X9, 2003b].) a natural person# corporation# unincorporated company# partnership# go)ernment unit or instrumentality# trust# or any other entity or organi3ation (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) 1. a mental view or outlook 2. the relationship of aspects of a subject to each other and to a whole 3. subjective evaluation of relative significance 4. a way of regarding situations or topics 5. the ability to perceive things in their actual interrelations or comparative importance (See Dictionary.com.) [in the conte6t of financial document imaging] a condition "hereby a check adheres during processing to an adAacent document (%ee# e g # [Accredited Standards Committee X9# ';;(b] )

payments legislation

-a+ments S+stem 'ask 0orce .a+or

.ermanence

person

.ers.ective

piggybacking

Item Processing Glossary - 30

platform

1.

2.

a specified combination of computer hardware, operating system(s), and (optionally) additional software applications a specified software environment, e.g., the Java 2 Platform Enterprise Edition (J2EE), that provides services and capabilities for software applications

.ocket

that part of an item processor to "hich items are sorted (%ee# eg# http<>>""" itemprocdirectory com>o)er)ie" htm ) proof of deposit 1. 2. 3. 4. 5. a plan or course of action a written contract or certificate the method by which any institution is administered a system of management a line of argument rationalizing the course of action of an organization or unit 6. a guiding principle, typically established by senior management, which is adopted by an organization or project to influence and determine decisions ([Paulk et al., 1993]) (See also Dictionary.com.) a check bearing a future date A postdated item is not )alid until that date is reached (%ee# e g # [Francis and Siegel, 2001].) the process of adding deposits to an account balance and subtracting checks and other "ithdra"als from that balance (%ee# e g # [Francis and Siegel, 2001].) information encoded on a check after presentment for processing through the payment system# normally the amount field (See, e.g., [Accredited Standards Committee X9, 2003b].) information encoded on a check before deli)ery to the purchaser# normally the routing and Gn-:s fields (See, e.g., [Accredited Standards Committee X9, 2003b].) 1. the operational process of moving checks and check related data from a collecting bank to a paying bank. (See, e.g., [Accredited Standards Committee X9, 2003b].) 2. the demand for payment of a negotiable instrument made by the person entitled to payment. (%ee# e g # [Francis and Siegel, 2001].) Item Processing Glossary - 31

POD policy

.ostdated check

.osting

.ost!.rinted 2IC3 data

.re!.rinted 2IC3 data

presentment

.rime .ass printed features

the initial run (or pass) of items through a document sorter (%ee# e g # [Francis and Siegel, 2001].) [in the context of financial document imaging] features printed on paper in the check manufacture, such as decorative patterns, security patterns, convenience amount rectangle outlines, hand print constraint boxes, dollar signs, field designators, etc. Printed areas may be either in the background or foreground. (See, e.g., [Accredited Standards Committee X9, 2003b].) 1. precedence, especially established by order of importance or urgency 2. an authoritative rating that establishes such precedence 3. something afforded or deserving prior attention 4. status established in order of importance or urgency (See Dictionary.com.) %ee transaction code the central unit in a bank that sorts and distributes checks and other "ork and arri)es at control figures for all transactions (%ee# e g # [0ompton# &,1(] ) equipment that simultaneously sorts items# records the dollar amount of each item# pro)ides totals for each sorted group# and balances the total to the original input amount (%ee# e g # [0ompton# &,1(] ) any process that tests the accuracy of an operation or function Also called balancing (%ee# e g # [Francis and Siegel, 2001].) the check does not ha)e any forged or unauthori3ed signatures# alterations# stop payment order# or other reasons "hy the depositor "ould obAect to the bank=s paying the check (%ee# e g # [0ompton# &,1(] ) a check that does not ha)e any forged or unauthori3ed signatures# alterations# stop payment orders# or other reasons "hy the depositor "ould obAect to the bank=s paying the check (%ee# e g # [Francis and Siegel, 2001], pages 102 103.) 4ayments %ystem $ask 9orce

priority

.rocess control code .roof de.artment

.roof machine

.roofing

.ro.erl+ .a+a*le

.ro.erl+!.a+a*le check

-S'0

Item Processing Glossary - 32

quality

1. fitness for use ([Juran, 1979]) 2. conformance to requirements ([Crosby, 1979]) ( the degree to "hich a system# component# or process meets specified requirements ([!EEE# &,,;]) * the degree to "hich a system# component# or process meets customer or user needs or e6pectations ([!EEE# &,,;]) 1. the activity of providing to all concerned the evidence needed to establish confidence that the quality function is being performed adequately ([Juran, 1979]) 2. a planned and systematic pattern of all actions necessary to provide adequate confidence that the item or product conforms to established technical requirements. ([Tice, 1983]) 3. the functional entity performing quality assessment and measurement (See [Baker and Fisher, 1987].) [also kno"n as quality factors] discernable# measurable characteristics inherent in# or ascribed to# quality (%ee# e g # [Barbacci et al., 1995], [McCall, 1994], and chapter 17 of [Schulmeyer and McManus, 1987].) 1. an approach based on statistical methods including random sampling techniques# testing# measurements# inspection# defecti)e cause findings# impro)ements# statistical inference# and acceptance sampling# used to ensure product quality Juality control requires both defect detection and defect remo)al (%ee# e g # [Schulmeyer and McManus, 1987].) ' the regulatory process through "hich "e measure actual quality performance# compare it "ith standards# and act on the difference ([Kuran# &,-,]) 3. the assessment of procedural and product compliance !ndependently finding these deficiencies assures compliance of the product "ith stated requirements ([Fisher and Light, 1979]) 1. the quality of a group of letters or numerals being recognizable as words or complete numbers (From the U.S. Internal Revenue Service. See, e.g., Legal Support of Document Imaging Systems) 2. written language that is readily intelligible (See Dictionary.com.) (7otice that# depending on ho" broadly "e interpret the "ord language# readability can encompass non-alphanumeric symbols and pictures ) Item Processing Glossary - 33

quality assurance

quality attributes

quality control

readability

reader/sorter

1. high speed automated paper handling machine that can recognize printed characters magnetically and/or optically and sort the documents into stackers depending on the recognized characters for the proper destination ([Accredited Standards Committee X9, 1996]) 2. an automated MICR document processing machine that reads E-13B printed characters magnetically in order to sort the documents. (See, e.g., [Accredited Standards Committee X9, 2003b].) & ' the bank that creates a substitute check if a substitute check is created by a person other than a bank# the first bank that transfers or presents such substitute check (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) 1. the act of regulating or the state of being regulated. 2. a principle, rule, or law designed to control or govern conduct. 3. a governmental order having the force of law. Also called executive order * a rule or order prescribed for management or go)ernment 5. a governing direction the regulation adopted by the Board of @o)ernors of the 9ederal 8eser)e %ystem to implement the E6pedited 9unds A)ailability Act (&' : % 0 *;;& - *;&;) $he regulation specifies# among other things# minimum a)ailability standards for deposited funds and rules designed to e6pedite check collection and returns (See, e.g., [Accredited Standards Committee X9, 2003b].) a term used for a rejected check(s) or other MICR encoded documents. The document may be rejected visually as not meeting ANS X9.27 criteria, or by not being readable on a reader/sorter. Most commonly this term applies to reader/sorter performance. ([Accredited Standards Committee X9, 2003b]) a payment, usually accompanied by a stub or coupon, detailing what the payment is for. the collection, posting, and other handling, of payments

reconverting bank

regulation

3egulation CC 11#C03 .art ##94

reject(s)

remittance remittance .rocessing

Item Processing Glossary - 34

re.air

the set of actions necessary to fi6 (or other"ise sal)age) misread and>or unreadable character# paper# magnetically-encoded# imaged# and>or digital information [in the context of check processing] the process of returning located values, e.g., of a check, a check image, and/or related information. As an example, we can think of the values of checks, check images, and/or related information as being retrieved from image archives and/or image exchanges a check returned unpaid by the payor bank !t may be returned to the BG9/ directly or through an intermediary (See, e.g., [Accredited Standards Committee X9, 2003b].) the category of problems encountered "hen attempting to process the item< & financial# i e # there are problems "ith the account itself (e g # insufficient funds# stop payment# and>or account balance una)ailable to dra"er) ' "hat are frequently referred to as administrati)e# there are problems "ith the physical instrument itself (e g # an unreadable +!08 line# an altered signature or amount# missing image# and>or torn or ske"ed image) (%ee# e g # [%H40o# ';;(] ) a bank (other than the paying or depositary bank) handling a returned check or notice in lieu of return (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) %ee ABA !nstitution !dentifier# and routing number positions 33 through 43 of the MICR line that contain the routing number. (See, e.g., [Accredited Standards Committee X9, 1999b].)

retrieval

return item

return item dis.osition

returning bank

routing and transit num*er routing field

Item Processing Glossary - 35

routing number

the nine-digit numeric identifier of a financial institution as assigned by the American Bankers Association or its agent. Routing numbers are used for routing purposes on checks, and virtually all other MICR documents, such as deposit tickets and batch tickets. A specific numeric series is reserved for internal bank usage. (See, e.g., [Accredited Standards Committee X9, 2003b].) The routing number normally consists of two groups of four digits followed by a Mod 10 check digit character, except in certain cases when a check digit is not used. In this case, the two groups of four digits shall be separated by a dash symbol. The routing number shall be bracketed by two Transit Symbols one on each side of the routing number. The Transit Symbol shall not be used in any field other than the routing field. (See, e.g., [Accredited Standards Committee X9, 1999b].) routing and transit number [in the conte6t of artificial intelligence] a representation of an allo"ed< state or value that an individual item, or system of items, may take on, possibly contingent upon some specified set of pre and/or post conditions individual behavior that an individual item, or system of items, may exhibit, possibly contingent upon some specified set of pre and/or post conditions characteristic of a relationship among two or more items, possibly contingent upon some specified set of pre and/or post conditions

3' rule

characteristic of an interaction among two or more items, possibly contingent upon some specified set of pre and/or post conditions combined "ith some corresponding action# usually e6pressed in the form of if-then or condition-action# i e # if some condition is true# then take the specified corresponding action rule!*ased s+stem 1. a control system that is defined by a set of rules, similar to a decision tree 2. a functional system in which knowledge is stored in the form of simple if-then or condition-action rules

Item Processing Glossary - 36

rules processing

6. an application processing technique wherein an inference engine monitors the applicability of rules to the states of the objects that comprise a system, and, where applicable, takes actions based on the adherence or non-adherence to the rules 7. processing that is either goal driven using backward chaining to test whether some hypothesis is true, or data driven, using forward chaining to draw new conclusions from existing data : % %enate )ersion of the 0heck $runcation Act of ';;( (%ee# e g # S. 1334, Check Truncation Act of 2003 and Check Truncation Act of 2003, S. 1334.) a set of amendments to 8egulation 00 (&' 098 part '',) "hich specifies conditions under "hich a payor bank must settle for a check "ith a presenting bank in sameday funds (See, e.g., [Accredited Standards Committee X9, 2003b].) a type of check that portrays a scene or colorful pattern in its background (See, e.g., [Accredited Standards Committee X9, 2003b].) & the range of one's perceptions, thoughts, or actions ' breadth or opportunity to function ( the area covered by a given activity or subject * the thing or end to which the mind directs its view 2 that which is purposed to be reached or accomplished (See Dictionary.com.) an addition to a document that will add complexity in its ability to be reproduced or changed (See, e.g., [Accredited Standards Committee X9, 2003b].) payment the abbre)iated name assigned to a bank# typically by the 9ederal 8eser)e Bank (See, e.g., [Accredited Standards Committee X9, 2003b].) [in the conte6t of check processing] that data element on the face of a check that is the signature of the party "ho is legally authori3ed to make (issue# "rite) the check

S. 1334 [Report No. 10879]

same da+ settlement

scenic check

sco.e

security feature/technique settlement short name

signature

Item Processing Glossary - 37

skew

the tilt of angle of a MICR character relative to the aligning edge of the document. The skew of the entire MICR line refers to the average tilt or angle of the line relative to the aligning edge of the document ([Accredited Standards Committee X9, 2003b]) A user-defined data structure used by a document processor handler to sort each item into the appropriate pocket (%ee# eg# http<>>""" itemprocdirectory com>o)er)ie" htm ) the process of organi3ing items "ith the intention of making subsequent processes simpler# more efficient# more accurate# and>or more reliable !n some cases# sorting may e)en ob)iate the need for some subsequent processing an instrument bearing a date 5 months or more prior to its presentation (%ee# e g # [0ompton# &,1(] ) & an ackno"ledged measure of comparison for quantitati)e or qualitati)e )alue ' something# such as a practice or a product# that is "idely recogni3ed or employed# e g # because of its e6cellence# or because of its understandability and ease of use ( "idely recogni3ed or employed as a model of authority or e6cellence * normal# familiar# or usual 2 commonly used or supplied 5 a point of reference against "hich indi)iduals are compared and e)aluated - that "hich is established by authority as a rule for the measure of quantity# e6tent# )alue# or quality 1 being# affording# or according "ith# a standard for comparison and Audgment (%ee# e g # Dictionary.com ) any %tate of the :nited %tates# the /istrict of 0olumbia# any territory of the :nited %tates# 4uerto 8ico# @uam# American %amoa# the $rust $erritory of the 4acific !slands# the Hirgin !slands# and the 7orthern +ariana !slands (%ee Federal Deposit Insurance Act.)

sort .attern

sorting

stale!dated check standard

state

Item Processing Glossary - 38

statement

1. a record prepared by an institution for a depositor that sho"s all deposits made# checks dra"n and paid# and the ne" balance and interest paid (if any) after each posting !n remittance# the portion of the bill sent to a customer that is returned "ith the check? has the customer account number and the amount o"ed on the document# normally# in the scan line (%ee# e g # Item Processing 101.) ' $he customer listings of transactions and or images (%ee# e g # %ag&ar Item 'rocessing and Check Imaging Glossary.) the process of periodically (and automatically) gathering information regarding the acti)ities associated "ith a customer=s account(s) and assembling this information into a form that is most useful to the indi)idual customer a depositor=s instructions to a dra"ee# directing the dra"ee not to pay a specific item (%ee# e g # [Francis and Siegel, 2001].) a paper or composite appendage to pro)ide an alternate +!08 clear band to the check (See, e.g., [Accredited Standards Committee X9, 2003b].) any of the four special characters in the E-&(B font used to identify fields of information# or to create a separation bet"een groups of digits (See, e.g., [Accredited Standards Committee X9, 2003b].) [in the conte6t of item processing] a record (receipt) of the occurrence of a transaction or e)ent# that includes all necessary and important details# e g # time and date# amount(s) of monies# and the parties in)ol)ed [in the context of financial document imaging] the left edge of the document when its face is viewed (See, e.g., [Accredited Standards Committee X9, 2003b].) & An agreement bet"een a buyer and a seller to e6change an asset for payment ' !n accounting# any e)ent or condition recorded in the book of accounts (%ee# e g # In$estorWords.com ) an optional code usually located in the Gn-:s field that can identify document type or handling :sage is specified by the financial institution on "hich the check is "ritten (See, e.g., [Accredited Standards Committee X9, 2003b].)

statement rendering

sto. .a+ment

stri.

s+m*ol

ticket

trailing edge

transaction

transaction code

Item Processing Glossary - 39

transit endorsement

[in the context of check processing] an endorsement placed on the document by an institution handling the document after the institution of first deposit. This endorsement is limited to nine-digit routing number and date, with trace/sequence numbering optional. "Arrow points" are not allowed. (See, e.g., [Accredited Standards Committee X9, 2003b].) a non-local item? a check "hose dra"ee is not located in the area defined as local (%ee# e g # [Francis and Siegel, 2001].) a letter sent alongside a shipment of negotiable items, or a document, explaining the purpose for the shipment. (%ee# e g # InvestorWords.com Investing Glossary.) to remo)e an original paper check from the check collection or return process and send to a recipient# in lieu of such original paper check# a substitute check or# by agreement# information relating to the original check (including data taken from the +!08 line of the original check or an electronic image of the original check)# "hether "ith or "ithout subsequent deli)ery of the original paper check (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) the preferred term for a con)erting bank the non-return of checks# either to the issuing bank or to the issuer (See, e.g., [Accredited Standards Committee X9, 2003b].) :niform 0ommercial 0ode a standardi3ed character encoding system that pro)ides a unique number (ordinal) for each character no matter "hat the platform# no matter "hat the language (%ee #nicode Home 'age ) the :niform 0ommercial 0ode in effect in a %tate (%ee# e g # H.R. 1474.EAS, Check Truncation Act of 2003 and S. 1334, Check Truncation Act of 2003.) a smgle instance of a digital image of an item A single )ie" typically "ould be all# or a portion# of one face (i e # front or back) of the item A single item may be represented by multiple )ie"s comprising a )ie" set (%ee# e g # [Accredited Standards Committee X9, 1997a].)

transit item

transmittal letter

truncate

truncating *ank truncation

9CC 9nicode

Uniform Commercial Code vie5

Item Processing Glossary - 40

6ndorsement

Information used to record the transfer of a negotiable instrument from one holder to another. Endorsements are placed on the check by payee(s), by the Bank of First Deposit, and by Banks subsequently handling the check. Electronically associated endorsements may also accompany electronic check records without being physically placed on the check. Endorsements are used to track the routing of the check in electronic or paper form.

Item Processing Glossary - 41