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Brave New World for Cheque Payments?

Change is afoot in the world of payments. The UK Treasury is consulting on an alteration to the regulatory and strategy setting regime for payments, and it seems likely that an OffPay-type body will emerge.

 

Technology, of course, is at the heart of all payments, and since the reversal of the Payments Council’s decision to close the centralised cheque clearings, the application of technology may indeed make a difference to the way cheques are cleared in the UK. No one disputes the continuing decline of the use of cheques, either personal or in business, but plenty of opinions exist about making this payment method a more efficient, less long-winded and ultimately more user-friendly way of getting money from one account to another.

 

One such application is the use of document image capture, turning a paper payment instrument into an electronic instruction for more timely clearing. A recent whitepaper from Digital Check Technology highlighted the use of image-based cheque processing in countries such as the US, Mexico, Malaysia, and more recently Nigeria and Ghana, to enable funds to be cleared on the same-or next-day.

 

This occurs, however, not without the threat of fraud once the original document is not available to the paying bank prior to the funds being switched. The whitepaper interestingly points towards the use of ultra violet features, invisible to the naked eye, in the design process that can be machine read, at speed, to help prevent some of the counterfeit and altered cheques entering the system.

 

Perhaps there is a brave new world for the traditional, old world of cheques.

 

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Comments: (3)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 April, 2013, 12:21Be the first to give this comment the thumbs up 0 likes

Isn't Cheque Truncation already there in the UK? As with many other technologies, one advantage of starting late is the ability to avoid the mistakes made by others. 

CTS-2010: Cheque Truncation Or Contract Termination 

CTS2010 Compliant Or Not?

Martin Ruda
Martin Ruda - Tall Group - Runcorn 19 April, 2013, 11:31Be the first to give this comment the thumbs up 0 likes

Whilst some of the building blocks exist, there is currently no truncation in the UK and very little consensus amongst financial institutions. One stumbling block is the shift of liability for fraud from the paying to receiving bank, hence the interest in machine readable UV features to prevent counterfeit and fraudulent alteration. What can be learnt from India's rollout of truncation?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 24 April, 2013, 17:34Be the first to give this comment the thumbs up 0 likes

While more details can be found in the two hyperlinked blog posts, a couple of learnings from India's CTS2010 program are:

  • Better branding of the program
  • Treating payers as defaulters when their old non-CTS2010 compliant cheques bounce (unless they can prove that they've replaced their old cheques with new CTS2010-compliant ones) 
  • Not slapping "cheque return" fees on payees under such circumstances. 

While on this topic, the date of cutover to CTS2010 in India has been postponed twice. The current deadline is 31 July 2013. I'm still continuing to watch this space.