CTS eliminate the physical movement of cheques by replacing them with digital images. Here's how it works:

• 1. Cheque Scanning: The bank branch where the cheque is deposited uses specialized scanners to capture high-quality images of the front and back of the cheque. The images should meet specific standards set by the banking industry.
• 2. Image Transmission: The scanned images, along with relevant data such as the cheque number, date, and amount, are electronically transmitted to the clearinghouse or a central processing center.
• 3. Clearinghouse Processing: At the clearinghouse, the digital images undergo further processing. The images are analyzed for readability, and any errors or issues are flagged for manual review.
• 4. Verification and Settlement: The clearinghouse forwards the digital images to the issuing bank. The issuing bank verifies the authenticity of the cheque and confirms whether it can be cleared. Once the verification is complete, the clearinghouse initiates the settlement process.
• 5. Return of Cheque: If a cheque is dishonored or rejected for any reason, the issuing bank sends a digital image of the dishonored cheque to the clearinghouse, which, in turn, forwards it to the collecting bank. The collecting bank can then provide the customer with a digital image of the dishonored cheque instead of the physical cheque.