The body that manages bank cheque clearing in the UK has introduced a new industry-wide system designed to reduce cheque clearing time to just one working day.
Under the new image-based cheque clearing system, average cheque clearing time will fall from “six weekdays” to “next weekday” according to an announcement from The Cheque and Credit Clearing Company (C&CCC).
The new system will give small business banking customers the ability to pay in a cheque on a working day then withdraw the funds before midnight the following working day at the latest. It is likely, however, that many UK banks and building societies will chose to reduce that 24-hour delay even further.
The new system will go live with some British lenders in October this year with all UK banks and building societies expected to have adopted the system by late 2018.
The system will be gradually phased in so that, over time, a growing number of bank customers will benefit from having cheques cleared at a faster rate.
In statement, the C&CCC’s chief executive, James Radford, said that while cheques remained an important method of payment for British businesses and individuals, the new system brings much-needed innovation to cheque clearing.
Cheque imaging will enable banks and building societies to offer customers the option of paying in images of their cheques with a smartphone via a secure mobile app rather than go into their bank branch.
“These changes will put cheques firmly in the 21st century, delivering real and important benefits for the many individuals, charities and businesses that regularly use cheques,” added Radford.
“Not only will cheques clear faster but banks and building societies may offer their customers the option of paying in an image of a cheque rather than the paper cheque itself.”
Business owners who use cheques will continue to be able to give or post cheques as they currently do, and recipients will still be able to pay in cheques via regular channels – in-store or at a bank or building society ATM. But, according to the C&CCC, the new system will see imaging become the industry standard method of cheque clearing going forward.
The current system sees paying-in banks and building societies physically transport cheques back to an issuing bank – the reason most take as long as six working days to clear.
Several major British high street lenders, including Lloyds and Barclays, already allow customers to use imaging to pay in cheques via mobile banking apps.
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