Following a comprehensive review of the industry-wide image-based clearing project (also known as Truncation and Electronic Cheque Presentment, or TECP), the CPA’s Board of Directors has decided not to proceed further with this initiative.

The decision was reached after thorough analysis of the findings of the industry-wide project review. During the review, it became clear that the enhancements to efficiency that had been originally anticipated would not be fully realized due to implementation delays and the ongoing evolution of the marketplace towards electronic payments. This review also highlighted the complexity of moving forward to industry-wide implementation, given the extensive interdependencies among participants’ project plans.

In view of these factors, and the fact that the current cheque clearing system continues to serve both the industry and payment system users well, the Board concluded that not proceeding further with the image-based clearing project is in the best interest of Canada’s payments system.

The decision not to proceed impacts only the plan for cheque image exchange between financial institutions (FIs) for clearing purposes. Most FIs are well advanced in a broader transition to cheque images for other purposes, such as internal record retention and delivery to customers, and this transition is expected to continue. Since most FIs are now offering or plan to offer image-based services to their customers, most of the anticipated benefits of the image environment will be available for businesses and consumers.

As part of this broader industry transition to the image environment, all businesses should have completed the modifications to their cheques by September 2, 2008. The specifications published in the CPA’s Standard 006 in January 2005 support the capture of high-quality images for a range of purposes other than clearing, including FIs’ internal use and delivery to clients, as well as other processing improvements not directly relating to imaging. It is important to adopt the specifications now, as most FIs are already using images for a number of functions.

However, the CPA and member FIs recognize that some “old format” cheques will remain in circulation after the September 2 deadline. FIs will continue to process the “old format” cheques until further notice, so as to avoid potential disruption to customers.

The CPA Board of Directors is reviewing strategic priorities over the longer term, taking into account the interests of payment system users and the industry, so as to continue to promote the efficiency and safety of Canada’s clearing system.