Ingenico 2500SP Supplementary Manual

Brand: Ingenico

Model: 2500SP

Type: Supplementary Manual

COMBATING

COUNTERFEIT CHECKS

AT THE TELLER WINDOW

A White Paper discussing issues and solutions to the

ongoing problem of check counterfeiting

EXECUTIVE SUMMARY

With more than a 75% market share in North

America, Ingenico is the leading provider of MICR

recognition devices in the United States. The com-

pany’s latest check reader is the e

-Check 2500SP.

In addition to superior MICR recognition and an

ergonomic design, the e

-Check 2500SP can be

equipped with a special detector that will read a

stealth mark which can help detect counterfeit

documents.

This White Paper describes some of the

business problems facing the retail banking sector.

It then looks at Ingenico’s MICR recognition

solutions as well as our latest innovation, the

ability to read invisible marks on checks.

RETAIL BANKING: CHANGES AND

CHALLENGES FOR THE “BRICK AND

MORTAR” BANK BRANCH

The retail banking market has undergone

tremendous change over the past ten years.

Technological advances have enabled “brick and

mortar” bank branches to implement distributed

processing based on more powerful PC’s and

Intranets with greater bandwidth. This has enabled

branches to reduce the cost of communications

while expanding the branch-level customer

services they offer.

Additionally, ATM access, home banking via

PC, mergers, acquisitions, and changes to banking

laws have opened new distribution channels and

have subsequently made room for new competitors.

These elements have combined to increase the

pressure branches feel to provide even higher

levels of customer service. “Cross selling” and

“one-to-one marketing” have become the catch

phrases commonly heard among bankers.

As closed systems were replaced by open

systems and terminals by personal computers,

opportunities to enhance customer service and

reduce transaction costs presented themselves.

While change has provided opportunities for

bankers, it has also provided opportunities for

criminals. Counterfeiting has become the manner

of choice when a criminal wants to rob a bank.

Both the back office operations and the branch

operations are vulnerable to counterfeiters.

Combating Check Counterfeiting at the Teller Window

A White Paper Discussing Issues and Solutions to the Ongoing Problem of Check

Counterfeiting

-Check 2500SP

INGENICO

CHECK FRAUD TRENDS AND

SOLUTIONS

In branch operations, several factors have

contributed to a dramatic rise in check fraud

presentments:

• Duplicating checks is easy with the relatively

low cost of PC’s, scanners and laser printers.

Additionally, many people have easy access to

high-end color copiers.

• With a low cost and promises of a high return

on investment, organized crime has joined the

mix, leaving law enforcement agencies over-

whelmed and often too swamped to prosecute

the criminals that are apprehended.

• High teller turnover and the pressure to serve

the bank’s good clients make visual check

inspection by branch personnel and detection

virtually impossible.

• Merger-mania has caused a scenario where

tellers don’t know their customers that well,

making it difficult to identify regular customers

from suspects.

As losses mounted it became clear that the

risk associated with doing nothing and charging

off the losses as a cost of doing business was no

longer acceptable.

Various solutions began to emerge. In the

mid-1990’s, positive pay and rules based software

systems began to take a foothold in branch

back office operations. During this period branch

operations began to look for solutions that would

allow them to identify suspect counterfeit items

without sacrificing service to good clients.

COMBATING CHECK FRAUD

An Industry Call to Action:

Building Partnerships to Reduce

Financial Loss

CHICAGO, IL, September 20, 1999 -

Check fraud losses are in the billions and

this serious problem for the banking industry

could only get worse with the advent of

new technology, making its detection and

prevention more difficult than ever.

1998 ABA CHECK FRAUD

SURVEY

$512 Million in Check Fraud Losses by

Survey Banks in One Year; How Does Your

Bank Stack Up?

One half of all financial institutions suffered

financial losses due to check fraud last year.

COUNTERFEIT CHECKS MAKE

THEIR MARK

Duplicating a check to create a counterfeit is

actually a two-part process. The counterfeit must

not only look identical to the original, but also

behave like the original. To behave as the original,

it must have magnetic ink properly printed on the

MICR line.

Early counterfeit attempts did not have or

need magnetic ink and the reason was simple.

With visual inspection and instinct as the only

guide, tellers were unable to determine which

checks had magnetic ink and which did not.

Banks looking for a simple easy-to-use solution

turned to check readers that had become popular

with retailers. Because a check reader could

quickly determine whether magnetic ink was

present, banks began to deploy check readers at

the teller window. The initial impact was dramatic.

Professional crime rings and local amateurs were

forced to regroup. In addition to stopping or

deterring check fraud, the MICR reader helped

to speed transactions by reading the MICR and

pre-filling teller screens.

FIRST UNION USES

INGENICO MICR READERS

TO REDUCE KEYING ERRORS

AND COUNTERFEITS

First Union began deploying Ingenico

MICR readers as part

of the bank’s initiative to improve

efficiencies in the branch.

"Ingenico provides our branches with check

readers that save both time and money by

minimizing the amount of keystroke errors and

reducing the amount of time the

consumer spends in the teller line"

Wayne Gardner

Vice President,

Systems Development Division

INGENICO

COUNTERFEIT CHECKS

COME FULL CIRCLE

Criminals adjusted to the installation of check

readers at the teller window by acquiring MICR

toner to make their counterfeit checks pass

through the check readers. Tracing the history of

counterfeits presented over the counter shows that

initially the MICR quality was poor, with perhaps

no more than half of the documents with sufficient

levels of magnetic ink to be considered “good”

checks. As criminals began to utilize MICR toner

to make their counterfeits, Ingenico’s analysis

indicated a steady rise in MICR quality.

Between late 1997 and into early 1999, it

appeared that the effectiveness of a MICR reader

for counterfeit detection via the MICR line had run

its course. However, beginning in mid-1999 and

into the present, MICR quality in counterfeit

checks has fallen. The number of bank’s deploying

check readers for assistance in detecting fraud

began to rise, mirroring the demand of the

mid-1990’s.

What caused this change? Ingenico analysis

on counterfeit documents, and interviews with

banks and law enforcement agencies indicated an

interesting trend. The “market” was being flooded

by new counterfeiters using relatively low cost

PC’s, scanners and laser printers. While the quality

of counterfeit checks produced by professional

criminals did not drop, the influx of new counter-

feiters caused an overall drop in MICR quality.

Due to media publicity and the availability

of “do-it-yourself” information on the Internet,

an entire new group of criminals was seizing

counterfeit check fraud as an opportunity for easy

money. As it was during the early to mid-nineties,

so it is today.

NEW STEALTH COUNTER MEASURES

Counterfeit checks will continue to pose

challenges to banks at all points of presentment.

As criminals continue to advance their ability to

duplicate checks, new counter measures are

necessary.

Working in partnership with Secure

Products, Ingenico has integrated stealth

technology into the e

-Check 2500SP which

allows the check reader to read an invisible

mark placed on select customer checks.

THE INVISIBLE MARK, HIGHLY SECURE AND

PRACTICALLY IMPOSSIBLE TO DUPLICATE

The materials and process used to create the

stealth mark are only available to check printers

that meet strict security requirements for the

storage, printing and distribution of checks. The

materials used to print the stealth mark are a

trade secret and are only manufactured in highly

secure facilities.

The stealth mark is invisible, cannot be

copied or laser-scanned, and is not visible under

ultra-violet or ambient light sources. The mark

can only be read by the invisible mark detector

installed in the e

-Check 2500SP. No detection

tools are available on the commercial market.

-Check 2500 SP

Customer or business

writes a check

At the check processing center,

the check is processed with confidence.

At the Teller Window. The e

-Check 2500SP reads the check, verifying the MICR line. After which, the 2500SP reads the account number to determine if

the invisible mark is required. If the mark is required but not present, the check is “held away”, the e

-Check 2500SP indicates an exception code on the

LED and the 2500SP sends an except code to the teller system.

The following diagram describes the process:

INGENICO

ABOUT INGENICO

Ingenico S.A. is a leading provider of smart card

secured transaction products and systems with

subsidiaries and partnerships all over the world

and customers in over 70 countries and territories.

Its subsidiary Ingenico Corp. provides hardware,

software and services to the ever-expanding

transaction needs of the North American market-

place, which demands quality and requires flexible

and robust payment solutions. Our solutions

include the Elite™ terminal family, which is built

upon the Unicapt™ architecture for optimum

application portability and secure multi-application

acceptance, and was the first to be EMVco

approved.

Major retailers need solutions that incorporate

both magnetic stripe and smart card technology.

Ingenico, the Power of One, has the technology

and experience to make it all work together. See

www.ingenico-us.com for more information.

ABOUT SECURE PRODUCTS

Secure Products offers a broad line of

detectors and scanners that improve document

and card acceptance security. The Company was

founded in 1994 and is headquartered in

Summit, NJ.

document are the properties of their respective holders. All information, features, and specifications are subject to change without notice.

Printed in 2001.

Ingenico North America

1003 Mansell Road - Atlanta, GA 30076

Tel:

(

770

)

594-6000 - Fax:

(

770

)

594-6003

www.ingenico-us.com

79 Torbarrie Road - Toronto, Ontario

Canada M3L 1G5

Tel:

(

416

)

245-6700 - Fax:

(

416

)

245-6701

www.ingenico-ca.com

Groupe Ingenico

9, quai De Dion Bouton

92816 Puteaux Cedex - France

Tel : 33 (0)1 46 25 82 00 - Fax : 33 (0)1 47 72 56 95

www.ingenico.com

Ingenico 2500SP Supplementary Manual

Ingenico 2500SP Supplementary Manual

Ingenico 2500SP Supplementary Manual

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