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Optical Character Recognition (OCR) – The 2023 Guide


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Optical Character Recognition or Optical Character Reader (or OCR) describes the process of converting printed or handwritten text into a digital format with image processing. In this article, we’ll discuss

  • What OCR is and how it works, as well as
  • The best tools, algorithms, and techniques for OCR.
  • The benefits of using OCR
  • Use cases and OCR applications


About us: Viso.ai provides the world’s only end-to-end computer vision platform Viso Suite. The solution enables leading companies to build, deploy and scale real-world computer vision systems. It enables teams to apply OCR to real-time video and read text or labels automatically. Get a demo here.

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Visual Text Recognition

Optical Character Recognition is a significant area of research in artificial intelligence, pattern recognition, and computer vision. OCR was also one of the earliest fields of artificial technology research and has emerged as a mature technology.

OCR began back in 1913 when Dr. Edmund Fournier d’Albe invented the Optophone to scan and convert text into sound for visually impaired people. Since then, OCR technology has experienced multiple developmental phases.

In the 1990s, the technology became prominent with the digitization of historical newspapers. In addition, the emergence of smartphones and electronic documents also lead to further advancements in OCR technology.


Visual character recognition for reading number plates
Visual character recognition for reading number plates (ANPR)


What is Optical Character Recognition (OCR)?

OCR stands for Optical Character Recognition and refers to a software technology that electronically identifies text (written or printed) inside an image file or physical document, such as a scanned document, and converts it into a machine-readable text form to be used for data processing. It is also known as text recognition.

In short, optical character recognition software helps convert images or physical documents into a searchable form. Examples of OCR are text extraction tools, PDF to .txt converters, and Google’s image search function.


Example of Optical Character Recognition (OCR)
Example of Optical Character Recognition (OCR) – Source
What is Scene Text Recognition (STR)?

In computer vision, machines can read text in natural scenes by first detecting text regions, cropping those regions, and subsequently recognizing text in those regions. The vision task of recognizing text from the cropped regions is called Scene Text Recognition (STR).

STR makes it possible to read road signs, billboards, logos, and printed objects such as text on shirts, paper bills, etc. STR applications include practical use cases such as self-driving cars, augmented reality, retail analysis, education, devices for the visually impaired, and others.


Scene Text Recognition (STR) for road sign reading
Scene Text Recognition (STR) for road sign reading


What is the difference between OCR and STR?

Comparing OCR with STR, optical character recognition (OCR) can be applied where text attributes are provided in a uniform input form. Hence, STR is able to read text with varying font styles, text shapes, illumination, orientation, occlusion (partially hidden text), and inconsistent camera camera conditions.

In general, scene text recognition is required to read Text with AI algorithms in real-world scenarios that involve very challenging, natural environments with noisy, blurry, or distorted input images.


Scene Text Recognition with AI-based OCR in Aviation for airplane registration
Scene Text Recognition with AI-based OCR in Aviation to read airplane registration labels


How does Optical Character Recognition work?

The concept of OCR is straightforward. However, its implementation can be quite challenging due to several factors, such as the variety of fonts or the methods used for letter formation. For example, an OCR implementation can get exponentially more complex when non-digital handwriting samples are used as input instead of typed writing.

The entire process of OCR involves a series of steps that mainly contain three objectives: pre-processing of the image, character recognition, and post-processing the specific output. Downstream tasks of OCR include Natural Language Processing (NLP) to not only read but also analyze and understand the meaning of text and speech.


OCR demo software for testing

To see OCR software in action, we found a simple web demo software you can try to use: Text Extractor Tool by Brandfolder. This optical character recognition online tool can convert an image of text (such as a screenshot) into plaintext. Be sure to avoid uploading any sensitive images or photos containing personal identifying information.

For a more comprehensive OCR demo, explore this image to Optical Character Recognition algorithm demo that allows Multilingual OCR, which works conveniently on all devices in multiple languages.


Scene Text Recognition Demo Application
Multilingual OCR text recognition demo – Link



The Process of OCR

In the following, we will show how optical character recognition works and explain the main steps of traditional OCR technologies.


1. Scanning the Document

This is the prime step of OCR which connects to a scanner to scan the document. Scanning the document decreases the number of variables to account for when creating the OCR software since it standardizes the inputs. Also, this step specifically enhances the efficiency of the entire process by ensuring perfect alignment and sizing of the specific document. This initial step can also include object detection, to focus subsequent vision processing tasks on specific image areas.


2. Refining the Image

In this step, the optical character recognition software improves the elements of the document that need to be captured. Any imperfections such as dust particles are eliminated, and edges, as well as pixels, are smoothed to get a plain and clear text.

This step makes it easier for the program to capture data while being able to clearly “see” the words being inputted without, for instance, smudges or irregular dark areas. Such image processing tasks are essential in all types of vision pipelines, to sharpen or auto-brighten images. OpenCV provides a toolset that is often used for such tasks.


3. Binarization

The refined image document is then converted into a bi-level document image, containing only black and white colors, where black or dark areas are identified as characters. At the same time, white or light areas are identified as background. This step aims to apply segmentation to the document to easily differentiate the foreground text from the background, which allows for the optimal recognition of characters.


4. Recognizing the Characters

In this step, the black areas are further processed to identify letters or digits. Usually, an OCR focuses on one character or block of text at a time. The recognition of characters is carried out by using one of the following two types of algorithms:

  • Pattern recognition. The pattern recognition algorithm involves inserting text in different fonts and formats into the OCR software. The modified software is then used for comparing and recognizing the characters in the scanned document.
  • Feature detection. Through the feature detection algorithm, OCR software applies rules considering the features of a certain letter or number to identify characters in the scanned document. Examples of features include the number of angled lines, crossed lines, or curves used for comparing and identifying characters. Such text recognition techniques are the basis of most deep learning OCR methods.

Simple OCR software compares the pixels of every scanned letter with an existing database to identify the closest match. However, sophisticated forms of OCR divide every character into its components, such as curves and corners, to compare and match physical features with corresponding letters.


5. Verifying the Accuracy

After the successful recognition of characters, the results are cross-referenced by utilizing the internal dictionaries of the OCR software to ensure accuracy. Measuring OCR accuracy is done by taking the output of an analysis conducted by an OCR and comparing it to the contents of the original version.

There are two typical methods for analyzing the accuracy of OCR software:

  • Character-level accuracy, counting how many characters were detected correctly.
  • Word-level accuracy, counting how many words were recognized correctly.

In most cases, 98-99% accuracy is the acceptable accuracy rate, measured at the page level (not algorithm level). This means that in a page of around 1,000 characters, 980-990 characters should be accurately identified by the OCR software.


The best OCR algorithm and state-of-the-art

Most accurate OCR Algorithms

MaskOCR, which is based on Vision Transformers (ViT) and was released in June 2022, is the best-performing OCR algorithm and achieves superior results on benchmark datasets for both Chinese and English text images. The previous best algorithm for Optical Character Recognition on the Chinese BCTR dataset, TransOCR, was surpassed by MaskOCR

The small model version of MaskOCR surpasses the previous best algorithm for Optical Character Recognition with comparable model sizes. Specifically, the Mask OCR method achieves better accuracy than PerSec, which is pretrained with 100 million real data, while it uses only 4.2 million real data points for pretraining.

ABINet and its extension ConCLR perform similar to the small ViT version of MaskOCR, while MaskOCR pushes the state-of-the-art results to a new level of 93.8% accuracy.


Best OCR algorithm benchmark list
Best OCR algorithms benchmarked on English scene texts – Source


Optical Character Recognition on Benchmarking Chinese Text Recognition
Optical Character Recognition on Benchmarking Chinese Text Recognition – Source


Test OCR Algorithms Yourself

Use this interactive demo to test the PARSeq model, which achieves high-performing results in STR (Scene Text Recognition) benchmarks (91.9% accuracy) when trained using synthetic training data (more about data augmentation).

  1. Access the hosted OCR model here
  2. Select the OCR model to use
  3. Upload a text image or use a given example
  4. Click “Read Text”
STR Model Demo to Read Test from Images
STR Model Demo to Read Test from Images – Link


Tesseract OCR

What is Tesseract?

Tesseract is a character recognition engine that can read a scanned text and convert it into digital text. It is open-source software that is released under the Apache License 2.0. Tesseract is available for various operating systems, including Windows, Linux, and Mac OS X.

Hence, Tesseract is a popular tool to recognize text in images, such as scanned documents and digital photos. Tesseract is accurate and efficient, and it can handle a variety of languages.


Tesseract OCR Software Demo for Testing

To recognize text in images with Tesseract, you input images that contain text. Tesseract can read a variety of image formats, including JPG, PNG, and TIFF.

Here is an easy way to use and test Tesseract for free with the model readily hosted on Huggingface: Test Tesseract OCR software.


Tesseract OCR Software Demo
Tesseract OCR Software Demo – Link


Optical Character Recognition Use Cases

As everything is becoming digitalized and advanced, OCR software solutions are being used by various businesses to streamline business processes, improve accessibility, and enhance customer satisfaction through AI-based OCR solutions.

Below, we list some of the best OCR solutions across industries today.


Number Plate Recognition with OCR

Automatic number-plate recognition (ANPR) uses OCR technology to identify the numbers on license plates. Today, number-plate recognition is used in a diverse set of commercial applications to find stolen cars, calculate fees for parking, invoice tolls or for access control to safety zones, and more.


OCR application with a number plate
Use case of an OCR application for Number Plate Recognition – Source
AI-based OCR Applications in Banking

The banking industry is deemed one of the largest consumers of OCR recognition apps as it helps enhance security, improve data management, optimize risk management, and enhance customer experience.

Before applying OCR technology, most banking documents were physical, including customer records, checks, bank statements, and others. Through the use of an OCR recognition solution, it becomes possible to digitize and store even older documents in databases.

OCR technology has also completely revolutionized the banking industry by:

  • Providing easy verification: OCR allows a real-time verification of money deposit checks and a signature by scanning them using an OCR-based application. An example of this can be seen in mobile banking apps, where checks can be deposited digitally and processed within days through OCR-based check depositing features.
  • Enhancing security: The electronic deposition of checks through OCR technology results in fraud prevention and increasingly secure transactions, fostering a better user experience. OCR can use the character reader count and machine learning methods to detect forged documents.


OCR Use Cases in Healthcare

OCR machine learning has proved to be beneficial for the healthcare industry. In the healthcare sector, OCR technology allows patient medical histories to be accessed digitally by patients and doctors alike.

In addition, patient records, including their X-rays, treatments, tests, hospital records, and insurance payments, can easily be scanned, searched, and stored using OCR full-form methods to digitize records and read labels with cameras.

Thus, optical character recognition helps streamline the workflow and reduce manual work at hospitals while keeping the records up to date.


How OCR is used in Transportation

OCR technology has revolutionized the intelligent parking, smart tolling, and transportation industries. Whether you’re booking a flight or a hotel, checking in to the airport or your hotel room, or managing your travel expenses, AI-based OCR solutions can be used at every point of contact to enhance customer experience.

The majority of airports and mobile travel apps use machine learning OCR technology for automated data extraction in security and documentation applications. The applications of OCR tools range from scanning passports to store personal data when booking a flight or a hotel.


optical character recognition with transportation
Real-time OCR with video streams, applied for parking lot management. – Built with Viso Suite


Advantages Of Optical Character Recognition

Optical Character Recognition offers a wide range of benefits, many of which were reviewed in this article. However, the most important benefits of AI-based text recognition systems are listed below for your reference.

  • Improved accuracy: Software-based character recognition eliminates human errors, resulting in improved accuracy.
  • Speed-up the processes: The technology converts unstructured data into searchable information, providing the required data available at faster rates and subsequently speeding up business processes.
  • Cost-effective: OCR technology does not require a lot of resources which reduces the processing costs and subsequently reduces the overall costs of a business.
  • Enhanced customer satisfaction: The accessibility of searchable data by the customers ensures a good experience, assuring better customer satisfaction.
  • Improved productivity: The easy accessibility of searchable data makes a stress-free environment for the employees, allowing them to focus on the main goals, boosting the productivity of a business.


What’s Next?

Optical character recognition (OCR) is used to turn scanned images and other visuals into text. This turns paper-based documents into editable and searchable digital mediums and enables the development of an automated optical character recognition (OCR) system.

To deliver OCR in enterprise applications, check out Viso Suite, the end-to-end computer vision platform. Request a personalized demo here.

If you enjoyed this article, we suggest you read more about other applications of Computer Vision:

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