Speedier image-based cheque clearing system begins operating in the UK

Cheques processed via the new system will be cleared by the end of the next weekday, compared to the six weekdays timeframe for clearing cheques processed via the existing paper-based cheque clearing system.

Payments and technology law expert Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com, said the new system uses technology that is some of the most advanced in the UK for transaction switching.

"It will be fascinating to see how innovation will grow around it given some of the unique features of cheques, such as the recipient not needing to share their account details," McFadyen said.

The operator of the payment systems, the Cheque and Credit Clearing Company (CCCC), said that the new system will run in parallel with the existing system until next summer as it is phased in.

"Initially, the volume of cheques going through the new system will be small and the vast majority of customers will not notice any change to how quickly their cheques clear," CCCC said. "However, over time, increasing numbers of cheques will be cleared using the new system and more and more customers will benefit from the faster timescale. Then, at some stage in the summer of 2018, all of the UK’s banks and building societies will clear all cheques via the image-based system to the faster timescale. The precise date as to when this will happen will be announced by the industry in due course."

The new image-based system allows consumers and businesses to pay in cheques to their accounts using online and mobile banking services instead of having to submit the cheque physically in a bank branch, CCCC said.

James Radford, chief executive of CCCC, said: "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."