The GOVERNMENT has released more details of its plans to bolster the future of cheques by allowing people to pay them in by photographing them on their tablets and smartphones.
It has launched a consultation on plans which will cut the length of time it takes for a cheque payment to clear from six days to as little as two.
The way cheques are processed at present creates “delay and expense”, the consultation said.
When paper cheques are paid into banks, they end up going on a journey around the country, travelling to the clearing centres of both the bank collecting the cheque and the paying bank so that sort codes, account numbers, and signatures can be checked for fraud and to establish there are sufficient funds.
While under the current system a cheque recipient has to be able to withdraw funds four days after paying it in, the cheque can still bounce after this period and it is only on the sixth day after payment that they can be sure the money is theirs.
The new system would enable money to travel faster through the payment system, cutting banks and building societies’ costs and lessening the risk of fraud from criminals who rely on the time lag of a cheque clearing.
It should also cut the risk of banks losing paid-in cheques and could help people living in rural areas who do not have access to a bank branch nearby.
The move would also enable smaller firms, which tend to rely more heavily on cheques, to pay them in later in the day as they will not be relying on the bank having to physically courier the cheque in order for the payment to start being processed.