A paper medium identifying device and an identifying method. The paper medium identifying device comprises an image data obtaining unit, a faulty wire detecting unit, an image dividing unit, a standard template data storage unit, a comprehensive analyzing unit, a new template generating unit and a judging unit. The paper medium identifying device divides the standard template into new sub-templates by dividing the template from a faulty wire position as margin, and then matches the sub-templates with a papery medium image which being identified so as to avoid the influence of faulty wires on the template match identification and improve the acceptance rate of the papery medium identifying device.