CPA orders system for cheque-imaging exchange

An agreement announced Wednesday between the Canadian Payments Association and CGI Group Inc. will result in software that will allow the nation’s financial institutions to exchange

digital cheque images.

Montreal-based CGI has been contracted to develop the software for $2 million. The company will provide a product to the CPA later this year which will subsequently be deployed to every cheque-issuing institution in Canada.

The technology already exists to create a digital image of a paper cheque, but this latest software, called the Exchange Control System, will allow transit of those images between banks.

“People will continue to write cheques and deposit cheques as they do today, but instead of those five million cheques moving on trucks or by plane or whatever, once the image is captured (it will be moved between banks electronically),” said Roger Dowdall, vice-president of communications and education at Ottawa-based CPA.

The CPA is a not-for-profit organization created by an Act of Parliament in 1980 whose members include cheque-issuing institutions. As part of their membership dues, they will receive the software. There are no alternative packages available, said Dowdall.

“This is the software,” he said. “There has to be agreement around this because everybody has to have a common basis in order for the exchange to work. If I’m sitting at TD and I’m going to be getting images from CIBC, for instance, we need to have a common basis of interaction.”

“Basically our role is we’re going to do the development, the architecture, design, development and maintenance of the Exchange Control System,” said Doug McCuaig, CGI’s senior vice-president and general manager of the Greater Toronto Area and Atlantic Canada.”

Exchange Control System will be developed as a Web-based application which can run on the various platforms, databases and application server technologies used by Canadian financial institutions.

CGI is expected to deliver the software to the CPA later this year, where it will undergo an initial test phase. During 2006, its interoperability between the banks will be tested and the software is expected to actually go into production in January 2007.

The adoption of the software should “should speed up processing time,” said Maura Drew-Lytle, a spokesperson for the Canadian Bankers Association, based in Ottawa. “It will certainly decrease wait times. If you need to search and have a cancelled cheque pulled as proof of payment, that can be done (quickly). It will end up being safer. You’ve got less paper floating around.”

Exchange of digital information between the banks may help cut down on cheque fraud, said Dowdall. “If a fraudulent cheque is determined, the ability to return that image is much faster than moving the actual physical cheque back through the clearing system. Speed is a factor in the ability to catch and reduce fraud.”

Last year, the CPA’s systems cleared and settled almost $147 billion in transactions each business day. The CPA’s agreement with CGI allows for licensing opportunities of the Exchange Control system outside of Canada.

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