The UK is beginning the phased roll out an image-based cheque clearing system that will slash processing times from six 'weekdays' to one day and pave the way for the introduction of interbank mobile cheque deposits.
Although cheque usage is in decline, 477 million were written in 2016. Previous attempts to abolish cheques caused political uproar and howls of protest from consumer groups and charities which still rely on paper-based donations.
Legislative changes to enable the passing of digital cheque imaging came into force in July 2016 and marked the onset of a number of bank trials of mobile cheque deposit systems for intra-bank clearing. Under the new system, banks will be able to accept and clear cheque images drawn from their peers.
Initially, the volume of cheques going through the new system - built by Vocalink and Exela Technologies - will be small, with the UK's Cheque and Credit Clearing Company running two clearing systems in parallel until all banks have come online later in 2018. This means that some cheques that customers write or pay-in will be cleared more quickly via the image system, and some will clear to the existing, six weekday timescale through the current, paper-based system.
James Radford, chief executive officer of the Cheque and Credit Clearing Company, says: "For more than 350 years the way cheques have been cleared in this country has essentially remained the same. Now, with the introduction of cheque imaging, we are bringing the UK cheque into the 21st century, ensuring that it remains a secure, robust and viable payment method for the millions of charities, businesses and personal customers that still write or receive cheques on a regular basis.”