November 01, 2006

In late September, the National Clearing House (NCHA) (NCHA) introduced a registry for image-survivable check security features designed to combat check fraud. "There are a number of security features with various verification systems behind them," explains Frank Jaffe, president of MorSecure (Portland, Maine), a project management and consulting firm involved in the registry initiative. "Vendors developed their own ways to do this because there are no standards. People don't really know how to verify [check security features]."

The risk management tool supports the interoperability framework developed by the New York-based Financial Services Technology Consortium (FSTC) (FSTC), which "allows simple messages to be used in common for the verification process of checks," Jaffe explains. The FSTC asked NCHA (Dallas) to create the registry, he says, and "also asked [Annapolis, Md.-based Accredited Standards Committee] X9 to develop a draft standard for trial use to eventually formalize the standard around the messaging piece" and enable interoperable security feature verification.

Glenn Wheeler, president and CEO of the NCHA, says that this interoperability will be key to the industry's efforts in creating additional fraud controls in the check space. "Check fraud is still a problem," he notes. "Over 30 billion checks are still being written in this country, and a lot is going on in the check area with imaging and image share. So through this work, we want to be able to define standards so that regardless of which vendor solution a bank is using, they will still have that interoperability."

The registry is Web-based and can be found at www.thencha.com. Vendors are invited to register their security features there after completing a questionnaire. MorSecure's Jaffe says the XML-based registry can be downloaded and will be updated as needed.

Vendor Sign-Up

Currently, according to the NCHA's Wheeler, the organization only is registering the vendors and validating their security features. "As [X9] finalizes the standards, then we'll allow financial institutions and merchants to sign in and identify those registered vendors and their solutions," he says. While there is no set timetable for when X9 will complete its part of the job, Wheeler says, "It is on a fast track."

In the short time the registry has been available to vendors, response has been rather good, according to Wheeler. "Several vendors have registered; four registered within a couple of days after it became available," he says. "The next step is being able to provide the interoperability for the industry. This project is a great example of cooperation between many players in the industry." * --Maria Bruno-Britz

ABOUT THE AUTHOR