OA AA AAAA
`
`US 20050216410A1
`
`as United States
`a2) Patent Application Publication (0) Pub. No.: US 2005/0216410 A1
`
` Davis et al. (43) Pub. Date: Sep. 29, 2005
`
`
`(54) SYSTEM AND METHOD FOR SINGLE
`POINT OF ENTRY DEPOSIT
`
`Publication Classification
`
`(76)
`
`Inventors: Steven Davis, Ossining, NY (US);
`Michael Davison, White Plains, NY
`oe TamesDerivan.Kyoaner
`(US): Bobby Ballard. Peekskill. NY
`(US): Stephen Wangner. Hicksville
`NY (US): Roz Del La Rosa Fort lee
`NJ (US);Charanjit Singh ,
`BridgGaAER, NJ (US)
`,
`
`,
`
`Correspondence Address:
`Fay Kaplun & Marcin, LLP
`Suite 702
`150 Broadway
`New York, NY 10038 (US)
`
`(21) Appl. No.:
`
`10/811,093
`
`(22)
`
`Filed:
`
`Mar.26, 2004
`
`(SL) Unt. C17 caccssssssssssststststststntneee GO6F 17/60
`(52) US. Cle cacscssssusstststststeieieieiintnieteiee 705/45
`
`(57)
`
`ABSTRACT
`
`Described is a method and system for single point deposit of
`checks.First, a computer scans each of a plurality of checks
`to generate digitized images thereof, the plurality of checks
`including at least one of non-consumer checks and consumer
`checks. After scanning the checks, the computer generates a
`masterfile including a record for each check which includes
`the digitized image of the corresponding check and a data
`portion including data obtained from a MICR line of the
`corresponding check. Once the masterfile is created, it is
`sorted into first and second sub-files based on the digitized
`images and/or the data portions. The first sub-file includes
`only the non-consumer checks and the second sub-file
`includes the consumer checks. The records of the first
`sub-file are processed according to a non-consumer check
`procedure. The records of the second sub-file are processed
`according to a consumer check procedure or
`the non-
`consumer check procedure.
`
`System100
`102
`
`106 Debtor's
`
`
`
` Clearing
`Network
`
` Second Computer
`Creditor's
`
`RDFI
`
`
`
`
`RDFI
`
`
`
`PNC 1018
`PNC 1018
`
`

`

`Patent Application Publication Sep. 29,2005 Sheet 1 of 9
`
`vel
`
`vOL
`
`901cOL
`
`soyparg
`
`10)99q
`
`BOlOAU|
`
`801
`
`$40}q9q
`
`Buuea| Iday
`
`US 2005/0216410 Al
`
`921
`
`$JOIPaD
`
`Idqu
`
`YOMION
`
`|“Big
`
`
`
`Jayndwogpuccves
`
`SLL
`
`Obl
`
`
`
`
`
`
`
`

`

`Patent Application Publication Sep. 29,2005 Sheet 2 of 9
`
`US 2005/0216410 Al
`
`debtor 202
`
`
`Generating invoice
`and sending it to
`
`200
`
`
`Receiving checkin
`
`
`responseto invoice
`
`
`
`Processing check
`to generate
`masterfile
`
`204
`
`Processing/sorting
`masterfile to
`generatefirst subfile
`and second subfile
`
`208
`
`
`Processing second subfile
`Processing first subfile
`
`according to corresponding
`according to corresponding
`
`
`procedureto settle
`procedureto settle
`
`transaction
`transaction
`
`
`
`
`
`
`210
`
`Fig. 2
`
`

`

`Patent Application Publication Sep. 29,2005 Sheet 3 of 9
`
`Scanning check using an
`image capturing device
`to generate check record
`
`Processing and
`analyzing checks
`
`Storing payment and
`debtor's data in the
`database
`
`Generating masterfile
`consisting of check
`
`Capturing imagesof both
`sides of the check when
`necessary to create
`digitized image
`
`records US 2005/0216410 Al
`
`300
`
`302
`
`304
`
`306
`
`308
`
`Fig. 3
`
`

`

`Patent Application Publication Sep. 29,2005 Sheet 4 of 9
`
`US 2005/0216410 Al
`
`
`Step206ofFig,2
`
`400
`
`Analyzing check record to
`determine its category (i.e.,
`
`consumer or non-consumer)
`
`
`
`
`
`Checkis categorized as
`
`amountor entire check and
`categorization
`
`Manually adjusting amount and/or
`categorization, if required
`
`
`
`Storing corresponding check
`recordinfirst subfile or second
`subfile according to categorization
`
`
`
`414
`
`Fig. 4
`
`
`consumer or non-consumer Check's categorization failed Displaying snippet of check
`
`
`
`
`
`
`
`
`
`Updating database with
`transactional data and debtor's
`data
`
`

`

`Patent Application Publication Sep. 29,2005 Sheet 5 of 9
`
`US 2005/0216410 Al
`
`¢‘Big
`
`O18
`
`oes
`
`oBsz9svecLON“DOWEvErererONVAV
`
`[ro'e6z3
`ee
`jeNos:
`leo.~~
`aconve
`
`0¢S
`
`a.
`
`
`
`Looz“ONY98YD~~SpEZt°y‘oy©ZL08EPoNvav——8cS9¢S
`
`68295“ONA99UD
`
`

`

`
`
` Submitting records of
`
`checksin first subfile
`to ODFI
`
`Patent Application Publication Sep. 29,2005 Sheet 6 of 9
`
`US 2005/0216410 Al
`
`Step208ofFig.2
`
`
`
`600
`
`
`
`
`.
`
`Creating IRD for each
`checkrecordin first
`subfile
`
`602
`
`
`Sending IRD's to
`creditor's bank for
`
`manual deposit to
`settle transaction
`
`604
`
`
`
`Fig. 6
`
`
`
`' Submitting records of
`checks in second
`
`
`subfile to ODFI
`
`
`
`
`
`702 Forwarding check
`records electronically
`to Clearing Network to
`settle transaction
`
`
`
`Fig. 7
`
`

`

`Patent Application Publication Sep. 29,2005 Sheet 7 of 9
`
`US 2005/0216410 Al
`
`3bf
`
`“y2h18SSiNS$4
`
`ra3PSWINSCTi0gZ1d“La/bi]?*tYQSs~reng4h/
`
`toAvtowrgbuy
`
`
`1GESLOCBGOLACHShoA=OSLISHLECUtLb8L959CO
`
`,2498Zhos4708008
`
`018ANBrerg~mses
`
`SemenCrsiowaw
`
`UEHERERERatagshtors.bULISOODn
`SveI9V'9RYEweOtbog
`
`
`
`yeyPMervrertvy-
`
`
`
`

`

`Patent Application Publication Sep. 29,2005 Sheet 8 of 9
`
`US 2005/0216410 Al
`
`qt08
`
`cel
`
`piooay
`
`yoaygpicoeel
`
`1093
`
`aiyang
`
`
`
`Jauunsuos+yoeyuD
`
`yoayspsoooy
`
`YSYUD
`
`jsil4
`
`

`

`Patent Application Publication Sep. 29,2005 Sheet 9 of 9
`
`US 2005/0216410 Al
`
`SJOUPA19
`
`140u
`
`HOMION
`
`s10\geq
`
`14qy
`
`Buuea|D JayNdwoysilZLL
`
`Ea
`
`40}99q
`
`901col
`
`QOIOAU|
`
`801
`
`
`
`
`
`Jayndwodyyno-4
`
`9ZL(foma
`JaynduioypuooesOLL
`
`
`
`OL“614
`
`c6L
`
`
`
`
`
`
`
`

`

`US 2005/0216410 Al
`
`Sep. 29, 2005
`
`SYSTEM AND METHOD FOR SINGLE POINT OF
`ENTRY DEPOSIT
`
`BACKGROUND
`
`[0001] U.S. Banking system allows processing of many
`types of electronic payments,
`including those made by
`consumer and non-consumer checks. The payments made
`with non-consumerchecks have different processing proce-
`dures than those made with consumer checks. Thus, a
`creditor who receives both types of checks must manually
`sort the checks in order to separate the non-consumer checks
`from the consumer checks before they are processed.
`
`[0002] Subsequently, the creditor must deposit the con-
`sumer checks in a different manner than the non-consumer
`
`checks. For example, the creditor maydeposit the consumer
`checks by entering the corresponding transaction informa-
`tion (e.g., ABA No., account No., check No., etc.). However,
`the non-consumer checks must be deposited manually. There
`is aneed for a single point of entry deposit system that would
`eliminate the need for a physical sorting of checks and allow
`creditors to deposit both types of checks electronically.
`SUMMARY OF THE INVENTION
`
`invention relates to a system and
`[0003] The present
`method for a single point of entry deposit for financial
`instruments (e.g., checks, etc.). Checks of all categories/
`types (e.g., consumer and non-consumer checks) may be
`scanned into a computer which then digitizes the checks into
`check records and stores the records in a masterfile. The
`computer then separates the records into a first subfile for
`non-consumer checks and a second subfile for consumer
`checks. The first subfile is then processed according to
`non-consumercheck procedures. The second subfile may be
`processed according to consumer check procedures or the
`non-consumer check procedures.
`
`In addition, a system for depositing checks may
`[0004]
`include a database storing information corresponding to
`debtors, a master file including a set of records for a plurality
`of checks received from the debtors. Each record corre-
`
`sponds to one of the checks and includesa digitized image
`of the corresponding check and data obtained from a MICR
`(Magnetic Ink Character Recognition) line of the corre-
`sponding check. Each record is categorized a non-consumer
`check or a consumer check based onthe digitized image, the
`data and/or the information in the database. Thefirst subfile
`includesa first subset of the records corresponding to checks
`categorized as non-consumer checks. The second subfile
`includes a second subset of the records corresponding to
`checks categorized as consumer checks.
`
`[0005] Furthermore, a system includes an image capturing
`device configured to capture a digitized image of a check
`and a processor. The processor extracts data from the
`digitized image of the check and categorizes the check as
`one of a non-consumer check and a consumer check based
`on the digitized image and/or the extracted data. The pro-
`cessor stores the digitized image and the data ina first file
`when the check is categorized as a non-consumer check and
`in a secondfile when the check is categorized as a consumer
`check,
`
`BRIEF DESCRIPTION OF THE DRAWINGS
`
`[0006] The accompanying drawings are included to pro-
`vide a further understanding of the invention and are incor-
`
`porated into and constitute part of the specification, illustrate
`several embodimentsof the invention and, together with the
`description, serve to explain examples of the present inven-
`tion. In the drawings:
`
`[0007] FIG. 1 shows an exemplary system according to
`the present invention for a single point of entry deposit;
`
`[0008] FIG. 2 shows an exemplary method according to
`the present invention for a single point of entry deposit;
`
`[0009] FIG. 3 shows a method for digitizing checks
`according to the present invention;
`
`[0010] FIG. 4 shows a method according to the present
`invention for sorting checks into a first subfile and a second
`subfile based on the check’s categories;
`
`{0011] FIG. 5 shows a screenshot of an exemplary
`embodiment of a software application according to the
`present invention;
`
`[0012] FIG. 6 shows a method for depositing non-con-
`sumer check records stored in the first subfile according to
`the present invention;
`
`[0013] FIG. 7 shows a method for depositing consumer
`check records stored in the second subfile according to the
`present invention;
`
`[0014] FIG. 8 shows an exemplary embodiment of a
`digital check record;
`
`[0015] FIG. 9 showsa flow chart diagram of processing
`checks according to the present invention; and
`
`[0016] FIG. 10 shows another exemplary embodimentof
`a system according to the present invention for single point
`of entry deposit.
`
`DETAILED DESCRIPTION
`
`{0017] FIG. 1 shows an exemplary embodimentaccording
`to the present invention of a system 100 for a single point of
`entry deposit of financial
`instruments (e.g., a check, a
`traveler’s check, a money order,etc.). The system 100 may
`include a creditor 104 (e.g., an individual, an organization,
`a corporation, etc.) which receives payments in the form of
`a check 106 from a debtor 102 (e.g., an individual, an
`organization, a corporation, etc.). Each creditor 104 may
`have a plurality of debtors 102; information regarding the
`debtors 102 may be stored in a database 114.
`
`In particular, the database 114 may contain infor-
`{0018]
`mation, suchas contact data for the debtors 102 (e.g., names,
`addresses, phone numbers,etc.), goods and/or services pro-
`vided, amount owed, financial institution information, or
`any other data that the creditor 104 may require. In the
`alternative exemplary embodiment, the database 114 may
`include a plurality of databases situated in one or more
`locations; each database may bestoring particular type of
`data and some databases may be storing overlapping data.
`The database 114 may beaccessible bya first computer 112
`(e.g., a computing arrangement that has basic input and
`output devices as well as memory and storage devices). The
`first computer 112 enables the creditor 104 to perform a
`variety of computing tasks, such as managethe database 114
`and run software applications. The first computer 112 may
`also be connected to a computer communication network
`116 which may be any type of a computing network(e.g., a
`
`

`

`US 2005/0216410 Al
`
`Sep. 29, 2005
`
`local area network, a wireless area network, the Internet,
`etc.). The first computer 112 may be operated by the creditor
`104 or a third party responsible for the depositing of checks
`received by the creditor 104.
`
`[0019] The system 100 is also described in conjunction
`with FIG. 2 which shows an exemplary embodiment of a
`method according to the present invention. In step 200, the
`creditor 104 generates and sends an invoice 108to the debtor
`102. The invoice 108 notifies the debtor 102 that a payment
`is due for particular goods and/or services provided by the
`creditor 104 and/or a third party provider. The invoice 108
`maybe generated based on data entered manually (e.g., by
`the creditor 104) or obtained automatically (e.g., from the
`database 114). After the invoice 108 is sent to the debtor 102,
`the database 114 is updated to reflect the invoice data.
`
`[0020] The invoice 108 is only one of a plurality of means
`of apprising the debtor 102 of the outstanding debt. For
`instance, the debtor 102 may have a regular business rela-
`tionship with the creditor 104 in which the creditor 104
`supplies the debtor 102 with goods and/or services on a
`regular basis pursuant to a contract (e.g., monthly, weekly,
`etc.). In another instance, the debtor 102 has a contractual
`obligation to pay the creditor 104 on a periodic basis(e.g.,
`monthly) and does not require a separate monthly notice in
`form of the invoice 108.
`In an alternative exemplary
`embodimentof the present invention, the debtor 102 may be
`a donor which has chosento send an unsolicited donation to
`a charity or not-for-profit organization; the unsolicited dona-
`tion would need to be accompanied by a notification of
`truncation/conversion of the check 106. Thus, the step 200
`of generating an invoice 108 may beoptional.
`
`In step 202, the creditor 104 receives a check 106
`[0021]
`from the debtor 102 either in response to the invoice 108 or
`for other purposes some of which were described above. The
`check 106 may be one of two categories/types: a first type
`of check drawn on a consumer account (e.g., a personal
`checking account); or a second type of check drawn on a
`non-consumeraccount (e.g., a business checking account, a
`third-party business account). It should be noted that the
`accounts of both the debtor 102 and creditor 104 maybe at
`the same or different financial institutions. The process of
`depositing the checks 106 may depend on the type of check.
`However, the exemplary embodiment of the present inven-
`tion allows the creditor 104 to electronically deposit the
`checks 106, regardless of their type (i.e., consumer or
`non-consumer checks).
`
`In step 204, the creditor 104 processes the check
`[0022]
`106 in order to generate a digital masterfile 128 as shown in
`FIG.9. The masterfile 128 contains a record 801 for each of
`
`the checks 106. An exemplary record 801 is shown in FIG.
`8. The exemplary record 801 is for a non-consumer check.
`The record 801 may include a digitized image of the check
`106 (i.e., a front image 812 and a rear image 814) as well as
`other check data such as an amount 810, an ABA number
`804, an account number806, a check number 802, and other
`information (i.e., the date when the check 106 was written
`or prepared for deposit; data obtained from the MICR line
`800). Some of the check data may be obtained from a MICR
`line 800 as discussed in greater detail below. Those of skill
`in the art will understand that consumer checks mayhave the
`same format or a different format from the exemplary
`non-consumer checkillustrated in FIG.8.
`
`[0023] The record 801 may be obtained by scanning the
`check 106 using an image capturing device(e.g., a scanner
`110). The scanner 110 may be connected as a peripheral
`device to the first computer 112 or integrated into the first
`computer 112. Once the checks 106 are scanned through the
`scanner 110, the first computer 112 captures the MICR line
`800, the front image 812 and the rear image 814. Then the
`first computer(or, in alternative, the second computer 118)
`parses and analyzes the front image 812 and the rear image
`814 as well as the check data (e.g., 802, 804, 806, 810,etc.)
`collected during the scan and maystore it in the masterfile
`128. Those skilled in the art would understand that the
`masterfile 128 may include just a single check or a plurality
`of checks of either or both types.
`
`the masterfile 128 may
`[0024] As shown in FIG. 9,
`include check records 801 for multiple checks 106 received
`by the creditor 104. The processing is accomplished via a
`specialized software which may be installed on the first
`computer 112 or may be run remotely via a second computer
`118 (e.g., through a web browser). If the specialized soft-
`ware is installed on the first computer 112, then most of the
`algorithms and logic for processing the checksis resident on
`the first computer 112. If the specialized software is operated
`remotely, then the algorithms are performed by the second
`computer 118. The process of capturing the check data for
`the masterfile 128 is described in greater detail below.
`
`In step 206, the records 801 of the masterfile 128
`[0025]
`are subjected to additional processing to sort each record
`801. The masterfile 128 may be processed by the first
`computer 112 or it may be transmitted for further processing
`to a second computer 118 through the network 116, depend-
`ing where the processing software is located. In the exem-
`plary embodimentof FIG.1, the processing of the masterfile
`128 is accomplished by the second computer 118 which may
`have the same capabilities as the first computer 112 (e.g.,
`connection to the network 116, sufficient storage, etc.). The
`second computer 118 may also have access to the database
`114. The dual computer arrangement shownin FIG.1 is an
`exemplary embodiment of the present invention. It is pos-
`sible to accomplish the steps 204 and 206 by using a single
`computer (e.g., using only the first computer 112 or the
`second computer 118) or any number of computers.
`
`If the processing of the masterfile 128 is done on
`[0026]
`the first computer 112, then the second computer 118 may be
`only used to connect to the ODFI 120. Those of skill in the
`art will understand that there may be various computing and
`networking arrangements used to accomplish the process
`described with reference to FIG. 2. As described above, the
`creditor 104 may perform all the steps or it may delegate
`some or all of the duties of preparing the checks 106 for
`deposit to a third party (e.g., a data processing entity).
`
`In step 206, the masterfile 128 is processed and
`[0027]
`sorted in order to separate the non-consumer check records
`801a into a first subfile 130 and consumer check records
`8015 into a second subfile 132 as shown in FIG. 9. Accord-
`
`ing to the present invention, the sorting is done once the
`records 801 have been created and stored in the masterfile
`128,
`thus, eliminating the need for the creditor 104 to
`manually sort the non-consumer and consumer checks 106
`prior to deposit. If the processing software is installed on the
`first computer 112, then the first computer generatesthe first
`and second subfiles 130 and 132. However, if the processing
`
`

`

`US 2005/0216410 Al
`
`Sep. 29, 2005
`
`software is located on the second computer 118, the second
`computer 118 processes the masterfile 128 to generate the
`first and second subfiles 130 and 132. The sorting process is
`described in greater detail below.
`[0028] After the sorting of the masterfile 128 intothefirst
`subfile 130 containing the non-consumercheck records 801a
`and the second subfile 132 containing the consumer check
`records 8010, thefirst subfile 130 may be processed pursuant
`to non-consumer check procedures (e.g., as defined by the
`USS. Banking Regulations) as discussed in step 208 and the
`second subfile 132 may be submitted for processing pursu-
`ant to consumer check procedures as discussed in step 210.
`The first and second subfile 130, 132 are submitted to an
`Original Deposit Financial Institution “(ODFT’) 120 by the
`second computer 118. It should be noted that the second
`computer 118 and the ODFI may be owned by the same or
`separate entities. For example,
`the ODFI 120 may be a
`financial institution that is providing the deposit services to
`the creditor 104. The ODFI 120 may follow specific proce-
`dures in depositing the consumer and non-consumerchecks.
`[0029]
`In step 208, the second computer 118 may process
`the non-consumer checks by sending the first subfile 130
`containing the non-consumer check records 801a directly to
`the
`creditor’s
`receiving
`deposit
`financial
`institution
`(“RDFI”) 126 or a third party’s RDFI. Alternatively, the
`RDFI 126 may print the non-consumer check records 801a
`stored in thefirst subfile 130 (e.g., create image replacement
`documents (“IRD”)) and manually deposit the IRDs. This
`process is described in more detail below.
`[0030]
`In step 210, the ODFI 120 deposits the consumer
`checks by transmitting the second subfile 132 to a Clearing
`Network 122 (e.g.,
`the ACH Network, Federal Reserve
`Bank,a private clearing house). The clearing Network 122
`settles each transaction by debiting the debtor’s RDFI 124
`for the amount 810 of the check 106 from the debtor’s 102
`checking account and by crediting the creditor’s RDFI 126
`by the amount 810 to the creditor’s 104 account. Thus, the
`exemplary system and method alleviates the need for the
`creditor 104 to manually sort the received checks 106 and
`facilitates the deposit of the checks by the creditor 104.
`Those skilled in the art would understand that the second
`
`subfile 132 may be processed in accordance with procedures
`for non-consumer checks as described in the step 208.
`[0031] FIG. 10 shows another embodiment of a system
`200 for single point of entry deposit of checks according to
`the present invention. The system 200 is substantially simi-
`lar to the system 100, exceptit containsa third computer 190
`and a fourth computer 192 connected to the second com-
`puter 118. The second computer 118 may submit the second
`subfilc 132 to the third computer 190 andthefirst subfile 130
`to the fourth computer 192. The third computer 190 then
`transmits the consumer check data contained in the second
`
`subfile 132 to the ODFI 120. The fourth computer 192 sends
`the first subfile 130 containing the non-consumer check
`records 8014 directly to the creditor’s RDFI 126. Thus, the
`system 200 accomplishes the same goal as the system 100 in
`step 208, except that the system 200 uses additional com-
`puters. As stated above,
`the present
`invention may be
`implemented using any number of computing devices to
`facilitate processing and transmission of data associated
`with the deposit.
`[0032] FIG. 3 shows a method for processing the check
`106 to obtain the record 801 and create the masterfile 128 as
`
`discussed with reference to step 204 of FIG. 2. As stated
`above the record 801 may include the front image 812, the
`rear image 814,
`the MICR line 800, as well as the data
`extracted from the MICRline 800 (e.g., ABA number804,
`account number 806, check number 802), the amount 810,
`and other miscellaneous data (e.g., the date the check was
`issued). The record 801 may also include data about the
`debtor 102 (i.e., remaining balance, overdue payment, etc.)
`extracted from the database 114 if there was a prior dealing
`between the parties.
`
`In step 300, the creditor 104 scans the check 106
`[0033]
`using the scanner 110 or any other type of image capturing
`device connectedto the first computer 112. The scanner 110
`may be a high-volume scanner capable of automatically
`scanning a large number of checks or a less sophisticated
`model that can scan one or a limited numberof checks at a
`
`time. It is preferable that the scanner 110 can capture both
`sides of the check 106 at the same time. However, it is
`possible for the scanner 110 to be able to scan only one side
`of the check 106 at a time, in which case the creditor 104 will
`have to scan the other side of the check 106 when desired.
`
`In step 302, a digitized image of each side of the
`[0034]
`check 106 is captured to producethe front image 812 and the
`rear image 814. The front image 812 may contain the date
`the check 106 was written, the addresses of the debtor 104
`and debtor’s RDFI 124, and the debtor’s signature. The front
`image 812 also contains the amount 810 and the information
`concerning the debtor’s 102 account encoded in the MICR
`line 800.
`
`In step 304 the MICRline 800 of the check 106 is
`[0035]
`processed and analyzed. The MICRline 800 is located at the
`bottom of the front image 812 and is typed in MICR font.
`The MICRline 800 may consist of the ABA number804,the
`account number 806,
`the check number 802, and other
`symbols and/or fields. The standardized printing of the
`MICR line 800 allows the first computer 112 to recognize
`the numbers and characters contained therein, using a con-
`ventional character recognition software resulting in easy
`digitization of the data 816. After the MICR line 800 is
`parsed the data is stored in the record 801 along with the
`front image 812 and the rear image 814.
`
`[0036] The information contained in the MICRline 800 is
`essential for processing of the check. Every financial insti-
`tution in the United States has a unique ABA numberissued
`by the Federal Reserve. While a financial institution may
`have a multitude of ABA numbers, those ABA numbers are
`only associated with that particular financial institution. The
`account number is also a unique identification number
`issued by a financial institution to distinguish between a
`multitude of account-holders. Furthermore, each check
`issued from a particular financial institution account may
`have a check number. A combination of the above-described
`
`numbers often makes a check unique, thus allowing the
`settlement transaction to be carried out at least partially
`electronically (e.g., without presenting a physical proof of
`the financial instrumentto a financial institution).
`
`In addition to analyzing the MICR line 800, the
`[0037]
`first computer 112 mayalso analyze the amount 810 located
`at the right side of the front image 812. The first computer
`112 may use character recognition software to recognize the
`handwritten amount 810 (or in some cases printed amount
`810) and store it in a digital format in the record 801. The
`
`

`

`US 2005/0216410 Al
`
`Sep. 29, 2005
`
`character recognition analysis may encounter difficulties in
`converting the handwritten amount 810, due to the unique
`nature of each person’s writing style. Thus, the character
`recognition software may have a certain accuracy in deter-
`mining the amount 810 based on the analysis of the hand-
`writing. Therefore, there may also be a manual final verifi-
`cation of the amount $10. After verification, the amount 810
`is also stored in the record 801. Furthermore, the software
`may also capture other information to include in the record
`801 such as the date of the check and the name and address
`on the check 106.
`
`[0038] After the record 801 is created, the first computer
`112 mayupdate the database 114 in step 306. The updating
`step may include reporting of a discrepancy between the
`amount 810 in the record 801 and the amount expected by
`the creditor 104,
`the correlation of the debtor’s check
`number 802 to a particular invoice 108, the verification of
`the debtor’s 102 name and address, etc. In addition, if this
`is the first check received from a particular debtor 102, the
`information (e.g., ABA number 804, account number 806,
`etc.) for the debtor 102 may be added to the database 114.
`
`consumerchecks, the special characters generally surround
`the ABA numberand the account number. Thus, by reading
`the special characters, the sorting software may be able to
`determine whether the check is a consumer check or a
`non-consumer check. Those of skill in the art will under-
`
`stand that there may be other unique features of consumer
`checks and/or non-consumerchecksthat may be used to sort
`between the two types of checks.
`
`[0044] Occasionally, a check may have a differently for-
`matted MICRline that deviates from the accepted norms. As
`a result, the above-described analyses based on the format of
`the MICRline 800 maybe inconclusive and further analysis
`may be required. However, even if the sorting software
`concludes that the check 106 is of a particular type, the
`sorting software may proceed with the further analysis to
`verify its own conclusion.
`
`[0045] After completing the analysis of the MICR line
`800, the sorting software compares the ABA number 804
`and the account number 806 with the information stored in
`
`In step 308, the masterfile 128 is generated. The
`[0039]
`masterfile 128 includes records 801 of every check 106
`if there is data of the previous transaction in the
`Thus,
`processedbythefirst computer 112. Thus, the masterfile 128
`database 114, the data will include information as to whether
`may include a plurality of data files and imagefiles corre-
`the account was a consumer account or a non-consumer
`sponding to each check which are combinedintoasingle file
`as shown in FIG.9.
`account. The sorting software may search the database 114
`for the ABA number804 and the account number806 tofind
`
`the database 114. If the debtor 102 has previously sent a
`check to the creditor 104 from the same checking account,
`then a record of that transaction is stored in the database 114.
`
`[0040] As described with reference to FIG. 2, after the
`masterfile 128 is created, it is processed to generatethe first
`and second subfiles 130 and 132 (step 206 of FIG.2). This
`step may be performed on a single computer(e.g., the first
`computer 112 or the second computer 118) or a plurality of
`computers as described above. In this example, the analysis
`and the sorting process are performed using a sorting
`software application running on the second computer 118.
`
`[0041] FIG. 4 shows an exemplary method for sorting
`checks 106 as described with reference to step 206 of FIG.
`2. In step 400, the sorting software analyzes each record 801
`contained in the masterfile 128 to determine its category
`(i.e., a non-consumer check or a consumer check). This
`analysis may be accomplished in a numberof different
`manners.
`
`In one example, the sorting software may analyze
`[0042]
`a format of the MICRline 800. Since each category of check
`generally usesa different format for the MICR line 800 (i.e.,
`positioning and spacing of the ABA number, the account
`number, and the check number). As described above, the
`exemplary check shown in FIG.8 is the general format of
`a non-consumer check, i.e., MICR line 800 is formatted
`having the check number802 at the far left, followed by the
`ABA number 804 and the account number 806. For con-
`sumer checks (not shown), the format is generally the ABA
`number located at
`the far left followed by the account
`number and the check number. Thus, by reading the format
`of the MICR line 800, the sorting software may determine
`whether the check is a consumer check or a non-consumer
`check,
`
`In another exemplary embodiment of the present
`[0043]
`invention, the non-consumer check shownin FIG.8 illus-
`trates the use of special characters surrounding the ABA
`number 804 and the check number 802. Conversely, for
`
`a match in the old paymentrecords. If the ABA number 804,
`the account number 806 of the check 106 match the ABA
`
`numberand the account numberof the previous check, then
`the check 106 originated from the same account, hence its
`category is the same. Thus,the sorting software may verify
`its previous conclusion or come to an initial conclusion
`based on this checking.
`
`[0046] Another example of a sorting method may use the
`amountof the check. For instance, the sorting software may
`utilize the amount 810 to find a matching amount in one of
`the unpaid invoices 108. If such an invoice is found, the
`information about
`the debtor 102 is obtained from the
`
`database 114 and the check 106 is categorized accordingly.
`For example, if the amount 810 is for $701.32 and in the
`database 114 the invoice 108 for $701.32, then there is a
`match. After the match is found and the information about
`
`the debtor 102 is extracted, the sorting software categorizes
`the check 106 according to the category of the debtor 102.
`Thus,if the debtor 102 is a non-consumerthen check 106 is
`categorized as a non-consumer check. This categorization
`method only worksin certain situations. For example, there
`is a possibility that the category of the check may not match
`the category ofthe debtor 104 (e.g., a business ownerpaying
`with a consumer check). Furthermore, this sorting algorithm
`only works whenthere is a single invoice 108 that matches
`the amount 810. Thus, if there are multiple invoices with that
`match the amount 810 or none of the invoices match the
`amount 810, this analysis is inconclusive.
`
`[0047] Regardless of whether or not the sorting software
`provides a definite result, the sorting software may run more
`sorting algorithms or moveto the next step. However,if the
`sorting software is unable to determine whether the check
`106 is consumer or non-consumer,
`it will conclude its
`analysis and categorize the check 106 using a default
`
`

`

`US 2005/0216410 Al
`
`Sep. 29, 2005
`
`category. The default category may be consumer, non-
`consumer, or undefined and it may require manual catego-
`rization by the user.
`
`manually categorize the check by choosing the check’s
`categorization based on the information supplied by the
`snippet 514.
`
`In step 402, the sor