CPA 006 Overview - Introduction

by Les C. Cseh, ASAP Cheques, Forms & Supplies
revised August 21, 2006

Are My Cheques Compatible With The New Standards?
Why Are Cheques Changing?
When Do I Have To Be Ready?
What Do I Look For?

Are My Cheques Compatible With The New Standards?

The rules for cheque design and printing have changed, and the deadline for using the new cheque format is approaching. These rules are named CPA Standard 006, usually abbreviated as CPA 006 (CPA stands for the Canadian Payments Association).

You have probably seen cheques with a new look, such as the set of boxes in the top right hand corner for filling in the date, and the new printing on the back of cheques, such as the curious phrase "Back/Endos" (Endos is the French word for Back).

Are your cheques compatible and are you ready? The purpose of this guide is to highlight some of the requirements, and to let you know where to find more information.

Why Are Cheques Changing?

Cheques do a lot of traveling! When you deposit a cheque, your branch will physically send it to your bank's processing centre. After processing it, they will send it to the processing centre for the bank where the person who wrote the cheque has their account. From there it will be sent to the cheque issuer's branch, before finally being returned to cheque issuer along with their bank statement. There could even be additional stops in between! And if the cheque is not honored (eg. insufficient funds, stop payment), then the cheque retraces these steps back to where it was deposited.

According to the Canadian Payments Association, some 5 million cheques are shipped each business day. This is expensive and time-consuming, slows down clearing time and gets in the way of speedy detection of fraud. There is also potential for delay and loss (for example, the author had to replace a payroll cheque because the armoured vehicle used to deliver cheques had been robbed).

Following the lead of the U.S., Singapore, Spain and other countries, financial institutions in Canada are preparing to transmit scanned cheque images electronically rather than physically transport the cheques. For this to function well, the information on cheques has to be captured accurately and at high speeds.

This is why the standards describing the design of cheques have been changing.

When Do I Have To Be Ready?

The original deadline was December 31, 2006 but this has been extended recently to June 30, 2007. This may seem a long way off, but most people order a years' worth of cheques at a time or more, so the time to learn about the requirements is now.

In the meantime, there is no reason that you should not use up any remaining older style cheques.

Unfortunately, it may not be as simple as ordering CPA 006 compatible cheques. If you are using accounting or personal finance software such as QuickBooks, Quicken or Simply Accounting, you may need to upgrade to a recent software version that supports the changes. In some cases, a CPA 006 compatible version of your software may not be available yet.


What Do I Look For?

The remaining sections describe many of the changes. While Canadian cheque printers should already have redesigned their cheques, even recent samples ordered through major banks continue to show various incompatibilities. However, keep in mind that at the time this article was written, the standards were still being fine-tuned, some software vendors had yet to fully support the new standards, and the deadline is the end of June 2007. If you have any concerns, then simply take several (voided) samples to your bank branch who will submit them to their Quality Assurance team for analysis.

For full details on the cheque standards, visit the Canadian Payments Association at www.payments.ca/.
 

Les C. Cseh is the President of ASAP Cheques, Forms & Supplies, a cheque printer specializing in high security, low cost cheques for business and individuals. The company operates out of Gananoque, Ontario and Watertown, New York. Les has been involved in cheque printing for over 15 years, including participation in ANS standards development. Inquiries can be directed to [email protected] and 888-3-CHEQUE (888-324-3783).