What is OCR (Optical Character Recognition) In 2024?

What is OCR
OCR stands for Optical Character Recognition. Photo: Jacob Lund/Shutterstock

Before the advent of Optical Character Recognition, the only way to digitize documents was to manually type the written text into a document or database. This was very time-consuming and came with a high risk of user errors, typos, and inaccuracies. 

OCR technology was developed in the 1970s by Ray Kurzweil of Kurzweil Computer Products Inc. It became popular in the early 1990s when the demand for digital versions of historical newspapers and other news documents started to grow. 

Since then, the technology has improved greatly, and now Optical Character Recognition is easy to use with excellent script recognition. It is also widely available to the general public, so you may have used OCR technology in mobile applications to scan and store digital versions of scanned documents on your smartphone.

This post will answer some of the most common questions about OCR, such as; what is OCR technology, how does OCR work, and how can Optical Character Recognition be used in different industries? 

What Is Optical Character Recognition?  

OCR is a process that uses specialized hardware and software to automatically scan a document and extract text captured from the resulting document image file. It is sometimes known as text recognition and can help to save time, costs, and other resources by automating processes and making storage more efficient.

What Is OCR (Optical Character Recognition)?

OCR is a process that uses specialized hardware and software to automatically scan a document and extract text captured from the resulting document image file. It is sometimes known as text recognition and can help to save time, costs, and other resources by automating processes and making storage more efficient.

The process was developed in 1974 by Ray Kurzweil, who intended for his text-to-speech synthesizer technology to be used in a reading machine to aid blind people. In 1980 Kurzweil sold his company, Kurzweil Computer Products Inc, to Xerox, which could see further commercial possibilities for the technology. OCR became more popular in the 1990s when it was used to create digital archives for newspapers and other organizations. 

OCR requires hardware such as an optical scanner to perform the initial scan. Software is then used for the OCR processing that turns the scanned document into searchable text. Optical Character Recognition OCR systems can also use Artificial Intelligence to run more advanced software known as ICR (Intelligent Character Recognition). This can recognize text printed in different languages and read individual handwriting styles. 

While originally used for digital archiving and online databases, modern OCR software is now used in a wide range of sectors. It is commonly used to turn legal, historical, and academic physical documents into Adobe Acrobat PDFs that can be searched, edited, and stored digitally. It also provides useful functions to support business sectors like tourism, healthcare, and retail.

How Does OCR Work?

How Does OCR Work?
The OCR technologies process has 6 different steps. Photo: Jacob Lund/Shutterstock

The OCR engine uses a combination of hardware and software to convert printed documents into machine-readable text. The document is first scanned in image format by computer systems hardware like an optical scanner then an OCR software package carries out the advanced processing. 

OCR technologies use the following steps:

Image Acquisition

The printed documents will be fed through a scanner which converts them to a digital version stored as machine-readable data. This bitmap is then passed onto the next stage of the process, where OCR software converts the image into machine-readable text. 

Preprocessing

The OCR software will first clean the image file captured by the scanner, using different techniques to remove errors and make it easier to read the characters. 

The scanned document will be deskewed or tilted where necessary to fix any alignment issues. Any digital image spots will be removed while boxes, edges, and lines will be smoothed and cleaned up. 

Text Recognition

The scanned image file is then analyzed for light and dark areas. The dark areas are identified as characters that need to be recognized by the software, while light areas are identified as the document’s background. 

The two main processes or OCR algorithms are pattern matching and feature extraction: 

Pattern Matching

Pattern matching (or pattern recognition) isolates a character image (or glyph) and compares it to the glyphs stored in its database. This works best with scanned documents produced in a well-known font, as it requires the input glyph to have a similar size and font to the stored glyph. 

Feature Extraction

Feature extraction breaks down the features of a specific glyph to help it recognize the character. It will look for features such as line direction, intersections, and closed loops and then find the closest match from the glyphs stored in its database. For example, the software may identify a glyph as having two diagonal lines that meet at the top and are crossed by a horizontal line across the middle. This will result in the software searching its database for a matching capital letter A.

Post Processing

Once the text has been analyzed, the OCR technology will convert the extracted data into a digital file. More advanced methods of OCR can create an annotated Adobe Acrobat PDF document that contains both the original scanned image and the extracted text. At this stage, users may wish to proofread the text and correct any basic errors or layout issues before saving the document in the right format and location for future use. 

The Benefits Of OCR Software

The Benefits Of OCR Software
The benefit of OCR is its ability to simplify data entry and processing. Photo: Jacob Lund/Shutterstock

The main benefit of Optical Character Recognition is its ability to simplify data entry and processing. It allows individuals and businesses to store files electronically, which removes the need for large-scale paper document storage. This also provides instant access to scanned paper documents in a digital format.

OCR technology can reduce storage costs, streamline digital workflows, and improve data security. Storing the information in machine-readable text format means that it can be shared and searched more efficiently than paper documents in physical form or image-only PDF. 

In addition, OCR software can improve operational efficiency by removing the need for manual data processing. It also enables actions that are not possible with paper documents like searching quickly for key information or sharing documents online.

OCR also plays a role in other artificial intelligence solutions like passport scanning systems that help businesses streamline operational procedures and improve the customer experience

OCR Technology Use Cases

The most common usage of OCR software is the conversion of printed documents into machine-readable text formats. This then allows the text contained in scanned paper documents to be edited with word processing software such as Microsoft Word or Google Docs. The OCR software lets users save the text file with the supporting image documents in formats like jpg, jpeg, png, and PDF.

OCR text recognition allows the data from scanned documents such as contracts, bank statements, and application forms to be quickly integrated into a big data system. The need for manual entry by large numbers of employees is removed and the machine-readable data can be used for data modeling which informs the decision-making process. In addition, OCR solutions often perform underlying functions as a part of other systems. This includes automatic number plate recognition at car parks, systems that assist blind and visually impaired users, and document indexing systems for search engines. 

OCR software is also used to support the specific needs of a range of industry sectors as different as banking, healthcare, and tourism:

OCR In Communication

OCR is widely used in communication functions such as sorting letters for mail delivery, converting scanned documents so they can be read by visually impaired users, or translating text within an image into another language. OCR solutions can automate data entry, processing, and extraction and speed up repetitive tasks. 

OCR In Banking

The banking industry can use OCR systems to process and confirm printed paper documents for a range of financial transactions like depositing checks or loan applications. This can help to improve security and reduce the risk of fraud.

OCR In Insurance

OCR is used by insurance companies to automate and streamline a wide range of repetitive tasks such as data capture, invoice processing, and filing claim paperwork. It can save time and reduce the number of documents lost and the risk of errors caused by manual data entry. 

OCR In Legal

Legal firms handle a large volume of handwritten notes and documents during their day-to-day business. Using OCR software to scan these physical documents and convert them into digital files removes the need to store massive quantities of paper. Because machine-readable text documents are searchable, converting printed paper documents to digital files allows staff to upload legal paper documents to secure digital storage. They can then easily retrieve and refer to legal documents from previous cases when they are needed.

OCR In Healthcare

Healthcare providers store and process vast amounts of confidential patient data like hospital records, medical test results, and details of insurance payments. Using OCR technology to process and store these records is more secure than storing paper records and makes it easier to keep records up to date. It is also easier to retrieve patient records when they are required.

OCR In Tourism

OCR technology is useful in service-based industries like tourism, where businesses need to employ staff to check in customers. OCR software can be used in passport recognition systems, which speed up border checks and boarding procedures at airports. 

OCR technology can also be used to speed up check-in for hotels. Guests can use the camera on their smartphone to scan their passports and send the image documents to their hotel. The machine-readable data can be recognized, analyzed, and stored by the hotel’s check-in system, making the process much more efficient for staff and guests.

OCR In Retail

OCR systems can be useful to the retail industry as they allow retailers to extract and process the data contained in physical documents like purchase orders, invoices, packing lists, and other business documents. OCR technology also plays a part in automatic age verification and customer loyalty schemes, as it can quickly capture the information on an ID Card at the point of sale. 

These forms of data extraction and document digitization speed up repetitive and time-consuming tasks, helping retailers boost productivity.

Final Thoughts

From its early application in digitizing historical newspapers, OCR has become a useful tool for individuals and organizations. Extracting the text from a digital image makes it possible for large amounts of machine-readable data to be stored in a secure and cost-effective format. 

OCR technology can eliminate the need for manual data entry and allows a scanned paper document to be searched and analyzed quickly and efficiently. It is even available in most modern smartphones, allowing users to scan and send documents without needing specialized equipment. 

OCR capabilities benefit a wide variety of businesses and organizations, assisting with everything from secure data storage for medical records to vehicle number plate recognition and automated passport checks. 

Frequently Asked Questions (FAQs)

What is OCR?

OCR (optical character recognition) is the use of technology to distinguish printed or handwritten text characters inside digital images of physical documents, such as scanned paper documents. Software that compares the text word by word is called optical word recognition.

Why is OCR important?

While our world largely exists in the digital realm, most businesses still use print media. This includes documents such as invoices, contracts, scanned legal documents, and other paper forms. OCR saves individuals and businesses time and money by converting images into text data that can be read by other business software. This technology streamlines operations, can conduct analytics, automates processes, and improves overall productivity.

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ABOUT THE AUTHOR

Sally
Sally Akins, BA
Business Content Writer & Editor
She is a skilled web content/copywriter with over 20 years' experience in writing blog articles, website content, press releases and more. She prides herself on producing engaging and well researched copy that exceeds my clients' expectations, and delivering copy within even the tightest schedule. Clear communication is key to this, and I always keep clients fully informed throughout the order process. She is a motivated self-starter who is always keen to learn new skills and technologies. I make a point of keeping up to date with the latest developments in social media and WordPress

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He is an organized and creative thinking sales management professional with experience in outside and inside sales in various markets. Working as freelancer in the Greater Boston Market, he moved to St. Louis and became an Account Executive, then a Sales Manager managing and coaching 12 sales reps covering a nationwide territory. He has developed his team with a combination of consultative selling and value before price coaching mindset which has won him a President’s Cup and many other financially rewarding awards at RICOH. His most recent role as a Continuous Improvement Manager provided insight into the importance of delivering a quality product in alignment with the value and reputation of his organization. It further enhances the aspect of selling on value as opposed to price.
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