The Office of Fair Trading (OFT) is leading an investigation into cheque clearing times as part of an on-going effort to increase the efficiency of the national payments system.
The payment systems task force, which is chaired by the OFT and includes representatives of banks, business and consumer groups, says the inquiry will determine whether there is significant demand for benefits for consumers and businesses in cutting cheque clearing times. Currently it takes three days for cheque payments to clear.
The task force will assess the costs and benefits of any changes to the current cheque clearing system and the different practices of financial institutions.
In May the panel reached an agreement with UK banks to reduce clearing times on electronic payments made by customers via the Internet or telephone from three days to at least same day or next day clearing depending on the time of day the payment is initiated. The task force gave banks two years to upgrade IT systems.
The OFT says it tackled e-payments first because of rising volumes of transactions. But cheque use in the UK is falling - it currently accounts for just six per cent of retail transactions - so banks are reluctant to invest in speeding up payments.
Research released by the UK's Halifax bank in August this year shows that cheque usage has hit an all-time low and, based on the current rate of decline, personal cheques could be virtually extinct within the next 20 years.
The number of payments made by cheque has dropped to its lowest level for 15 years, falling from a peak of 3.7 billion in 1990 to 2.1 billion in 2004.