Cheques could become hi-tech electronic money-transfer system

Cheques fell out of favour with banks as they were costly to process and need to be stored afterwards, yet they remained popular with customers, particularly the elderly.

Now a team of academics has developed a system which has the benefits of easy, electronic money transfer while preserving the physical attributes of something that is handed to the payee.

The team from York, Newcastle and Northumbria Universities developed the system after speaking to a group of 80-year-olds from Tyneside.

Their research is to be presented at the Computer Supported Co-operative Work conference in Seattle, in the US.

The new cheques look identical to traditional ones, except for the grey background on each one which is actually billions of tiny dots laid out in a specific pattern.

The account holder writes out the cheque as normal, but uses a digital pen which “reads” the cheque as it is written. Once completed, they tick a box – the only difference to a normal cheque – and the information is transmitted directly to the payee’s bank account.

Dr John Vines, of Newcastle University, said: “Sending a cheque in a Christmas or birthday card is something many people do – not just the older generation.

“It’s easy and safe but it’s also personal.

“The beauty of this system is that it is a safe and cheap electronic transaction for the banks but it’s a physical paper-based transaction for the customer.”

Project lead Professor Andrew Monk, a psychologist at the University of York, said the 80-year-olds canvassed clearly understood cheque payments.

“Many of us still use cheques and in some cases the only alternative is to hand over cash which often isn’t ideal,” he said.

“For the banks, it’s not only the time and cost of processing cheques but, at present, where you store them after they have been processed.

“But for the bank’s customers – and particularly the older generation – cheques are seen as a vital part of their financial independence.

“They provide a permanent record which means they can easily keep track of what’s being spent.

“The people who worked with us also valued the experience of handing over a signed cheque to a named individual rather than the anonymity of online transactions.

“The beauty of our design is that you not only have something physical to hand over to the recipient, you also have a cheque book stub as a record.”

According to Newcastle University, cheque use has been falling in the UK since 1990.

While the number of cheques being written each day is still high – around 3.5 million a day – this is down from 11 million in 1990.