ECC and Electronic Check Presentment - Part 1

The adoption of electronic payment and presentment mechanisms is becoming more widespread as the financial industry sees benefits in leveraging automation—not only to reduce back office costs but also to improve their customer service.

Most recently in the United States, President Bush signed the Check Clearing for the 21 st Century Act (“Check 21”), which encourages financial institutions to exchange digital images rather than paper to process checks with each other. There are other examples globally.

Electronic presentment, check truncation and check imaging adoption globally

• Interbank Data Exchange ( UK)
• Electronic message exchange of Euro cheques ( France)
• Exchange of image based electronic cash letters ( Hong Kong)
• Electronic posting with paper to follow ( South Africa)
• Centralized Cheque Truncation System/National Image Archive ( Singapore)
• Check 21 ( USA)]

_{[Sourced from “The Changing Landscape of Payments”a Unisys Whitepaper, May 2002.]}

This has huge ramifications on the check-cashing process as we know it today. Benefits include a reduction in the time it takes to clear a check through the system and earlier detection of issues relating to insufficient funds and fraudulent checks. The industry will also save on the costs associated with transportation and storage of paper checks.

Obviously, the security around digital images of checks is very important. Without some form of authentication of the digital image, someone could intercept the transmission of a digital image and alter it, causing additional losses for the banks. Authentication also ensures that the information on the check (ie values, payor, etc.) has not been tampered with.

However, the process of efficiently securing electronic check presentment, or check image capture, presents a major challenge: machines scan thousands of checks per minute, and each image must be signed to ensure that the information on the check can not be denied later.

This level of automation in the financial industry can only be achieved though the use of very strong, very fast, digital signatures . Elliptic Curve Cryptography (ECC), recommended by ANSI (American National Standards Institute) , offers financial institutions high security using much smaller key sizes that any other public key cryptographic scheme available today.