UK Treasury aiming to modernise the cheque with imaging technology

7 March 2014

The UK government is hoping to bring the paper cheque into the 21st century by implementing an imaging system that will enable banks to verify and clear a cheque from an image, rather than needing the original paper copy.

A government consultation has been launched on the use of the technology, which has been in operation in the US, France and parts of Asia.

Barclays is planning to pilot the technology in the coming months, with the full launch of cheque imaging on its mobile banking app slated for the second half of 2014, should legislation be passed to enable the verification of cheques via smartphones and tablets.

The Treasury argues a change needs to be made in the way cheques are processed, as while many believe they are disappearing from use, statistics show that almost £840 billion of cheques was processed in 2012, accounting for ten per cent of all payments made by individuals.

While there is a decline in cheque volumes, over nine in ten businesses and other organisations continue to use them.

Under the current model, cheques are transported from bank branches to clearing centres where the details are checked and the data is exchanged electronically between banks. Cheques then need to be taken from the clearing centre of the collecting bank to an exchange centre, and then to the clearing centre of the paying bank, which all takes time.

There are two broad approaches that have been highlighted by the government to deliver cheque imaging, with legislation required to support whichever model is selected.

Financial secretary to the Treasury, Sajid Javid, said: "This government is determined to create a banking sector that works for consumers and serves businesses. New technology has the potential to deliver real benefits for customers. That is why we’re creating a new payments regulator and why we are consulting on speeding up the cheque clearing process."

Angela Thomas, managing director of the Cheque and Credit Clearing Company said that bringing cheques into the 21st century is a clear priority.

"Getting the necessary legislation changed will help us take a big step towards enabling cheque imaging regardless of who you bank with. We will now continue our work with the Treasury and the industry to agree a realistic date to deliver. Our goal will be to ensure that as many customers as possible can benefit as quickly as possible whilst ensuring we maintain the integrity and security of the cheque clearing for everyone."

By Tony Aynsley

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