WO1999066450A1

WO1999066450A1 - System for concurrent check validation and micr encoding

Info

Publication number: WO1999066450A1
Application number: PCT/US1999/013547
Authority: WO
Inventors: Miles Busby; Michael Bailey
Original assignee: Source Technologies, Inc.
Priority date: 1998-06-16
Filing date: 1999-06-16
Publication date: 1999-12-23
Also published as: AU4686499A

Abstract

The present invention comprises a system and method for validating MICR information on a financial document (18) and concurrently encoding the financial document with additional MICR information. The system (10) includes an input device for receiving information to be printed on the financial document, a MICR device having a MICR reader element and a MICR printer element, and a validation system in communication with the input device and/or MICR device. The MICR reader element reads MICR information printed on the financial document and transfers that information to the validation system for validation. The validation system returns a validation signal for use in printing validation information on the financial document. Further, the MICR printer element concurrently prints additional MICR information on the document, such as the transaction amount. In another embodiment, a MICR system for on-demand and real-time printing of MICR documents includes an input device for receiving information to be MICR printed, a MICR device for reading and printing MICR information on the document in real time, and optionally a computer for running software to create the images to print on the MICR document.

Description

System for Concurrent Check Validation and MICR Encoding

Cross-Reference to Related Applications This application claims the benefit of U. S. Provisional Application No.

60/089,493, filed June 16, 1998.

Field of the Invention

The present invention relates to a process and apparatus for printing images which

may be read by magnetic ink character recognition (MICR) devices, and more

particularly, to a system that allows financial instruments to be concurrently validated and

MICR encoded for input into MICR readers/sorters.

Background

When a check is used in a financial transaction, it typically goes through a

multiple step process leading to the ultimate settlement of the account. Upon presentation

of a check for a transaction, a bank teller or cashier at a merchant terminal usually

validates the check. The check is validated by inserting it into a validation device which

reads the numbers along the bottom of the check which represent the issuing bank's

routing number and the individual's checking account number. Further, the validation

device also prints validation information, such as the date and amount of the check, across

the check and typically perpendicular to the other printing on the check.

Some validation printers are able to automatically read the numbers at the bottom

of the check because these numbers are printed with magnetic ink in a special magnetic

ink character recognition (MICR) format. The numbers are printed at a specific location and in a specific format to facilitate a bank or other merchant feeding the check through a machine that automatically reads the MICR numbers. As the check passes through the automatic reader, the MICR numbers are first magnetized, and then they are read by sensing each character's magnetic profile. Thus, the routing and account information from each check can be easily and quickly read, verified and stored by an automated device.

The numbers at the bottom of a check are generally pre-printed on the checks by high cost, high speed printing machines. These machines may comprise traditional printers for most of the information on the check, such as name, address, etc., as well as specialized MICR printers. The MICR printers may comprise off-set printers utilizing MICR paste, laser printers utilizing MICR toner, and daisy-wheel or dot-matrix printers using a MICR ribbon, etc.

Once the check has been validated, a bank or merchant typically encodes the amount of the check in a MICR format on a specific location on the bottom of the check next to the other MICR information. In a bank operation, for example, validated checks are sent to a "back room^'' where MICR encoding is performed. Machines, such as a Model No. 7766 "Proof encoder by NCR, may be used by bank employees, who read the amount of each check, input the amount into the machine, and then feed the check through the machine for MICR encoding. Similarly, merchants may encode checks before sending them to the bank. Merchants have an incentive to perform this encoding function themselves, as many banks give merchants about a 1 to 4 cent credit per check received that is already encoded with the MICR check amount information. These encoding machines are very expensive, costing in the range of about $3,000 to $15,000. Thus, banks and merchants attempt to maximize the utility of these machines by placing them in batch operation-type environments.

Once the validated check is MICR encoded, it is sent to a MICR reader/sorter device that picks up all of the MICR formatted account number, bank and check amount information. The MICR reader/sorter device is then able to sort the checks in a designated manner, such as by bank routing number. The checks are then collected and sent back to their issuing banks to close out the settlement process. The amount of the check is considered to be in float from the time the check is first presented for a transaction until the settlement process is complete. Alternatively, the MICR reader/sorter may be able to convert the MICR information to electronically formatted information that is used by the bank to account for and transfer funds to settle the transaction.

There are a number of drawbacks, however, to the above validation and MICR encoding process. First of all, the MICR encoding equipment is very expensive. This requires a purchaser to justify its cost by using it in a high volume, batch-type operation. Relying on manual inputs in this high volume, repetitive and boring environment, however, may lead to reliability errors as the people inputting the check amounts may be easily wearied or distracted. Further, batch processing leads to other inefficiencies, such as increased process time from the point of first receiving and validating the check to the point of converting the MICR information into electronic information. These processing delays may lead to other inefficiencies, such as an increased float value as the value of the check cannot be utilized by the bank until it is converted into an electronic format.

Additionally, the current system requires the check to be read twice before the check amount is MICR encoded on the check. The check is first read by the teller or merchant to verify the amount and enter it into the validation device, then the check amount is read again by the person inputting the check amount into the MICR encoder. Thus, this process is unnecessarily duplicative and adds extra expenses and overhead costs to the business.

Not only are these problems evident with checks, but also with other MICR printed instruments. For example, coupons or other special instruments are often printed with magnetic ink. Since the printing process is generally very expensive and the coupons have value, there is a great deal of security required once the MICR printed instruments are produced. Rather than trying to store and control an large number of MICR printed instruments, it is more desirable to be able to produce the MICR printed documents whenever they are needed, using blank paper for example. Thus, on-demand printing of MICR documents is advantageous because it only requires security and control over the printing device.

Further, present systems have the disadvantage of requiring that most of the MICR printed information must be known well in advance of printing. For example, the account number information is pre-printed on the check, requiring a consumer to wait for checks to be ordered having their name and address information. Alternatively, the consumer may have immediate access to checks pre-printed in MICR format with the proper bank and account numbers, but have to write-in their name and address information by hand. Many merchants, in this latter situation, are reluctant to take these checks from consumers as they are deemed more likely to be fraudulent. Thus, a system that allows for the realtime input of various MICR printed information is desirable.

Summary of the Invention

According to the present invention, a system for processing a financial document having MICR printing thereon includes an input device for receiving a transaction amount, a MICR device for reading and printing MICR printing information on the financial document, and a validation system for providing on-line verification of the

MICR printing information on the financial document. The transaction amount represents the value of the financial document for use in a financial transaction. The MICR device includes a MICR reader element for magnetizing the MICR printing and converting the read MICR characters into a first electrical signal representing the MICR printing. The MICR printing, and optionally the transaction amount, are sent to the validation system. The validation system validates the that MICR printing information, which typically includes bank and individual account numbers, is valid and optionally that the individual account has a balance to cover the transaction amount. The MICR device also includes a MICR printer element for encoding MICR characters onto the financial document. Preferably, the MICR printer element encodes the transaction amount on the face of the document, beside the other MICR information. The MICR printer element is preferably an ink jet printer having a piezo electric print head element. Also preferably, the MICR printer element is adapted to print magnetic ink having a viscosity of greater than about 4 cP. The validation information may be printed on the financial document by the MICR printer element, or alternately by a separate validation printer.

A method for processing a financial document comprises receiving a financial document having MICR printing thereon. The MICR printing is read using a MICR reader element, which outputs a signal representing the MICR printing information. A MICR printer element encodes, preferably utilizing a magnetic ink, MICR formatted characters on the financial document. Also, a validation signal that validates the MICR printing is received from an on-line validation system. This validation information is printed on the financial document. Additionally, information representing a transaction amount may be received from an input device and printed on the document utilizing a MICR printer element or alternately a separate validation printer. Further, the MICR characters encoded onto the document preferably include the transaction amount. Preferably, the magnetic ink has a viscosity of greater than 4 cP, and more preferably between 4 cP and 19 cP. Also, the MICR printer element preferably includes an ink jet printer, and more preferably includes a piezo electric print head.

In yet another embodiment, a system for creating a MICR formatted document includes an input device for entering information to be printed on the MICR document and a MICR device for receiving the information from the input device. The MICR device has a MICR printer element adapted for printing on-demand and in real-time MICR formatted characters utilizing a magnetic ink having a viscosity of greater than about 4 cp. Further, the MICR printer element comprises an ink jet printer, and more preferably includes a piezo electric print head. Additionally, the magnetic ink may have a viscosity between about 4 cp - 19 cp.

Similarly, a method of creating a MICR formatted document includes inserting a recording medium into a MICR device, entering information to be printed on the recording medium into an input device, and encoding MICR formatted characters onto the recording medium in real time, wherein an ink jet printer is utilized to encode the information. The ink jet printer preferably is adapted to utilize magnetic ink having a viscosity of greater than about 4 cp, and more preferably between about 4 cp - 19 cp.

Brief Description of the Drawings

Fig. 1 is a schematic representation of a concurrent validation and MICR encoding system of the present invention;

Fig. 2 is a front view of a typical financial instrument utilized and/or created by the present invention;

Fig. 3 is a process flow diagram of one embodiment of the concurrent check validation and encoding capability of the present invention; and

Fig. 4 is a schematic representation of a real-time MICR document creation system of the present invention; and Fig. 5 is a process flow diagram of the system of Fig. 4 for printing MICR formatted documents from blank forms.

Detailed Description of the Invention According to the present invention, a point-of-sale ("POS")/desktop system for concurrent validation and magnetic ink character recognition (MICR) encoding of a document comprises presenting a financial instrument or document for a transaction, entering the financial instrument into a MICR device, reading the MICR printing information from the document, entering transaction information into an input device associated with the MICR device, and concurrently printing MICR readable images and validation information on the financial instrument.

Referring to Figs. 1-3, one embodiment of a system 10 for concurrent validation and MICR encoding comprises a terminal 12 in communication with a MICR device 14, in communication with an on-line validation system 16. For example, in performing a financial transaction, a financial instrument 18 such as a check is presented to the operator, such as a cashier or teller, of terminal 12, such as a merchant POS terminal, a bank terminal or a personal computer (Step 1, Fig. 4). Check 18 is inserted into MICR device 14 such that the code numbers 20 on the bottom of the front face of the check align with the MICR reader and printer elements 22 and 24 of the device (Step 2, Fig. 4). Code numbers 20 at the bottom of check 18 are written in magnetic ink and include the issuing bank routing number 26, the individual account number 28 and the check number 29. Typically, code numbers 20 are formatted in the pattern of industry-recognizable E13B and CMC7 fonts to facilitate recognition by MICR equipment. As check 18 is inserted into MICR device 14, the reader element 22 magnetizes account codes 20 and is able to detect the MICR characters. Thus, the characters of account codes 20 are read by MICR device 14 and bank routing number 26 and individual account number 28 are converted into an electronic format that is validated with on-line validation system 16 (Step 3, Fig.

4).

The validation process insures that bank routing number 26 and individual account number 28 are authentic. On-line validation system 16 includes a bank database, a store database and other public or private databases and networks that identify, authenticate, validate and check the account numbers and other information identified by the MICR information on a document. Further, the electronic information gathered in the validation process may be used in accounting for the transaction.

Additionally, MICR device 14 and/or terminal 12 of the present invention comprises an input device 30 in communication with MICR printer element 24, thereby enabling printing MICR formatted images. Input device 30 may comprise a real or virtual keyboard having alphabetic, numeric, or alpha-numeric characters. Also, input device 30 may be integrated into terminal 12. The teller or cashier may enter a transaction amount 32, such as the amount of the check, into input device 30 (Step 4, Fig. 4). Then, transaction amount 32 is printed with magnetic ink in MICR format as MICR transaction amount 34 in the appropriate position, preferably at the bottom portion of check 18, by MICR printer element 24 (Step 5, Fig. 4). Additionally, the validation information 36 is printed on check 18 (Step 5, Fig. 4). Validation information 36 may be printed using typical, non-MICR characters and inks by a validation printer 38, or the validation information may be printed by MICR printer element 24. Also, validation information 36 may be printed on the front or back of check 18, preferably perpendicular to the other printing on the check. Validation information 36 may include the transaction amount, the date, the name of the bank and other similar information used to track the financial transaction. Additionally, validation system 16 may confirm that individual account number 28 has sufficient funds to cover transaction amount 32. Check 18 is then ejected from MICR device 14 with all of the appropriate information, such as bank routing number 26, individual account number 28 and transaction amount 32, printed on the check in MICR format (Step 6, Fig. 4). Check 18 may be immediately sorted or processed as desired. Thus, the further processing of check 18 may be expedited as the concurrently validated and MICR encoded check no longer needs to be collected and sent through a separate batch process that encodes the transaction amount of the validated check in a MICR format.

Preferably, MICR device 14 comprises the standard reader components of current MICR reader devices and is modified to include a printer element for printing the MICR characters. For example, a suitable MICR reader element 22 includes a MAGTEK validation reader device by Mag-Tek, Inc. or a CHECKMATE validation reader device by Checkmate Electronics, Inc. MICR printer element 24 may be a daisy -wheel or dot- matrix type printer with MICR ribbon, a laser jet printer utilizing magnetic ink toner, or preferably an ink jet printer utilizing magnetic ink. The ink jet printer preferably comprises a piezo electric ink jet print head. The ink jet printer advantageously provides a low cost, high quality and reliable MICR device. The piezo electric ink jet head advantageously allows for the use of higher viscosity magnetic inks than the typical ink jet printer. For example, typical ink jet printers may only be able to print magnetic ink having a viscosity of less than about 4 centipoise (cp), while the piezo electric ink jet head allows for printing magnetic ink having a viscosity of up to about 19 cP. Preferably, the present invention is able to utilize ink having a viscosity in the range of about 4 - 19 cP, more preferably about 6 - 10 cP, and most preferably 8 - 10 cP. In turn, the higher viscosity ink allows for the use of a greater concentration of magnetic pigments or particles in the ink, ultimately leading to better magnetic character recognition of the printed images. A suitable example of a piezo electric print head includes the PIEZO JET 64 ink jet print head manufactured by Xaar Limited.

The combination of the reader/printer capability of MICR device 14 advantageously allows all of the relevant MICR data to be encoded onto the check at the time it is first presented in a transaction. This eliminates the need for later processing and speeds the settlement time, as the checks can be immediately and automatically read and sorted for return to the issuing bank. Further, all of the pertinent account and transaction information can be read and formatted into an electronic file that can be used by the bank for accounting and settlement purposes.

Additionally, in another embodiment in Figs. 4-5, MICR system 50 advantageously allows a MICR document 52 to be printed on a recording medium 54 such as paper, on demand and in real time. This eliminates the need for inventories of pre-printed MICR documents and their associated security problems and expense. Further, MICR system 50 includes MICR device 56 preferably having an ink jet MICR printer element 58 that eliminates the need for costly laser printer devices for MICR printing. The type of documents that can now be instantaneously ink jet printed, rather than kept in inventory, include business checks, money orders, and gift certificates, for example. These documents advantageously may be printed with MICR formatted bank account numbers, individual account numbers, and transaction amount, for example. To create MICR document 52, recording medium 54, such as a blank form, is inserted into MICR device 56 and software and hardware associated with the MICR device is utilized in combination with input device 60 to create the pre-determined MICR formatted document. MICR device 54 and input device 60 may be similar to the previously discussed MICR device 14 and input device 30 (Fig. 1). Alternatively, a computer 62 may be in communication through input/output 64 with the MICR device 54 to create pre- determined MICR formatted document 52. Computer 62 includes memory 66 and processor 68 for respectively storing and processing electrical signals representing data and software programming, for example. A suitable example of computer 62 include current models of desktop personal computers. The MICR information on document 52 is created in real-time in a MICR format, advantageously allowing the scanning of the MICR information for data gathering and sorting purposes, for example. Thus, the capability of ink jet MICR formatting of blank forms provided by the present invention beneficially allows customized MICR formatted documents to be created in real time, thereby eliminating document inventories and allowing accurate MICR scanning of documents. Although the invention has been described with reference to these preferred embodiments, other embodiments can achieve the same results. Variations and modifications of the present invention will be apparent to one skilled in the art and the following claims are intended to cover all such modifications and equivalents.

Claims

ClaimsWhat is claimed is:

1. A system for processing a financial document having magnetic ink character recognition (MICR) printing thereon, comprising: an input device for receiving a transaction amount representing the value of said financial document for use in a financial transaction; a MICR device having: a MICR reader element for reading said MICR printing on said financial document and outputting a first signal representing said MICR printing; and a MICR printer element using magnetic ink for encoding MICR-formatted images onto said financial document; and a validation system for receiving said first signal representing said MICR printing and outputting a second signal validating said MICR printing information.

2. A system as recited in claim 1, wherein said MICR printer element encodes said transaction amount on said financial document.

3. A system as recited in claim 1, wherein said MICR printer element encodes validation information on said financial document, wherein said validation information represents said second signal that validates said MICR printing information.

4. A system as recited in claim 1, further comprising a validation printer that prints validation information on said financial document, wherein said validation information represents said second signal that validates said MICR printing information.

5. A system as recited in claim 1 , wherein said MICR printing includes a bank account number and an individual account number.

6. A system as recited in claim 1, wherein said MICR printer element comprises an ink jet printer.

7. A system as recited in claim 6, wherein said ink jet printer comprises a piezo electric print head element.

8. A system as recited in claim 1, wherein said magnetic ink comprises a viscosity of greater than about 4 cp.

9. A system as recited in claim 9, wherein said magnetic ink comprises a viscosity of between about 4 cp and 19 cp.

10. A system as recited in claim 8, wherein said MICR printer element comprises a piezo electric head.

11. A method for processing a financial document, comprising: receiving a financial document having MICR printing thereon; reading the MICR printing using a MICR reader element and outputting a signal representing the MICR printing information; encoding magnetic ink MICR characters on the financial document using a MICR printer element; receiving a validation signal that validates the MICR printing; and printing validation information on the financial document.

12. A method as recited in claim 11, further comprising: receiving a transaction amount representing the value of the financial document; and printing the transaction amount on the financial document.

13. A method as recited in claim 12. wherein encoding magnetic ink MICR characters includes encoding the transaction amount.

14. A method as recited in claim 11 , wherein the MICR printer element comprises an ink jet printer.

15. A method as recited in claim 14, wherein the ink jet printer comprises a piezo electric element.

16. A method as recited in claim 11, wherein the magnetic ink used to encode the MICR characters has a viscosity of greater than about 4 cp.

17. A method as recited in claim 16, wherein the magnetic ink has a viscosity of between about 4 cp - 19 cp.

18. A system for creating a MICR formatted document, comprising; an input device for entering information to be printed on said MICR document; a MICR device receiving said information from said input device, said MICR device having a MICR printer element adapted for printing on-demand and in real-time MICR formatted characters utilizing a magnetic ink having a viscosity of greater than about 4 cp.

19. A system as recited in claim 18. wherein said MICR printer element comprises an ink jet printer.

20. A system as recited in claim 19, wherein said Inkjet printer comprises a piezo electric print head.

21. A system as recited in claim 18, wherein said magnetic ink has a viscosity between about 4 cp - 19 cp.

22. A method of creating a MICR formatted document, comprising: inserting a recording medium into a MICR device; entering information to be printed on the recording medium into an input device; and encoding MICR formatted characters onto the recording medium on-demand and in real-time, wherein an ink jet printer is utilized to encode the information.

23. A method as recited in claim 22, wherein the ink jet printer is adapted to utilize magnetic ink having a viscosity of greater than about 4 cp.

24. A method as recited in claim 23, wherein the magnetic ink has viscosity of between about 4 cp - 19 cp.

25. A method as recited in claim 22, wherein the ink jet printer comprises a piezo electric element.