CHICAGO -- Time was when writing a check that didn't bounce was enough, but in the electronic age, one must also worry that it won't shred or lose its magnetism as well.
From the time someone writes a check until it reaches a final resting place, that piece of paper may travel through electronic scanners a dozen times or more.
With each pass, the issuer's bank and account number, routing information and, in some cases, the amount of the check, are read and recorded automatically before the check passes on for more processing.
This automated processing depends on scanners being able to read the series of numbers printed across the bottom of the check, which is why the digits look funny, with extra bits of ink added here and there, making them more difficult for humans to read but easier for machines.
Some scanners actually do identify the digits optically, but the newest technique uses magnetism instead. The ink used to print those funny-looking digits contains a precise amount of iron oxide, and when the check enters a scanning device, the ink is magnetized so that each digit gives off a different electromagnetic wave, which is what the machine reads.
This technology, called magnetic-ink character recognition, or MICR, has the advantage of reducing errors. A scanner either gets the information right or not at all. In the latter case, it kicks out the check for a human to process.
Development of MICR technology has seen a concentration of check production and writing. Personal checks are printed with magnetic ink and then forwarded to the customer. Payroll checks may be written at a central location on printers that can cost $350,000 and then are distributed to employees.
All that is about to change with the introduction of desktop laser printers that cost $15,000 or less and can print fancy-looking, machine-readable paychecks on blank paper, according to Freeman Cottrell, manager of distributive systems for Xerox Corp.
A few desktop laser printers capable of writing checks are already on the market from smaller suppliers, and Xerox expects to bring out its products this fall, Mr. Cottrell said.
The other major vendors in the field, Hewlett-Packard Co. and International Business Machines Corp., are expected to enter the arena soon.
Automated check writing has always given auditors problems, said Mr. Cottrell, because it raises the possibility of losing control over a company's finances.
Auditors like to have the check writing and printing machinery centrally located in a secure room, Mr. Cottrell said. The idea of sending instructions all over the country to write checks with desktop printers scares these people.
A major feature of the Xerox machines will be that each printer has hardware to guarantee a clear audit trail of who is writing checks to whom and for how much, Mr. Cottrell said.
It is intended that the new printers, which will write all kinds of negotiable or high-security documents, will reduce the opportunity for fraud, he said.
"The greatest opportunity for fraud comes in the distribution system," he said. "By making distribution electronic, we will reduce fraud."
An example of how desktop printers might help is seen in the hotel industry. A hotel chain, with employees all over the country, may issue payroll checks on the $350,000 printers and then use couriers to physically deliver the checks over a geographic area.
With desktop printers running under $15,000, it may be possible to have a printer in each hotel. The orders to print the checks would be sent electronically from the central office.