After plans to introduce plastic currency notes from 2016, Britain now plans to use smartphone technology through which people can take photos of cheques and send them to banks to deposit in their accounts.
This will speed up cheque clearance from the current six days to two, official sources said on Thursday. The plans are expected to be rolled out next year on the lines of the system currently in use in the United States.
‘Cheque imaging’ does not require a hard copy of the cheque to be present at every stage of the paying-in process. This means that time spent transferring it between different banks and central clearing depots is saved as well as reducing the overall costs, the sources added.
Nearly 840 billion pounds worth of cheques were processed in Britain last year, accounting for 10% of all payments made by individuals. As many as 23 million cheques were sent as gifts because they are still the most trusted method of sending money through the post.
People without smartphones will be able to use similar technology at cashpoints or branches or continue to pay in paper currency as they do now. However, the ubiquity of smartphones has the potential of saving time and costs by using the ‘cheque imaging’ system.
Next year, the David Cameron government will consult on introducing legislation to speed up cheque payments and making it easier for businesses and consumers to use this important payment method in the 21st century, sources said.
This technology is already widely used in the United States. Barclays bank is planning to introduce mobile cheque deposit next year. The changes are also designed to help business transactions, which accounted for 370 million cheque transactions in 2012.
Financial secretary to the treasury, Sajid Javid, said, “We want to see more innovation so that customers see the benefits of new technologies….We want to take the very best of the current system and make it better. We want to cheques to have a crucial role in the ongoing success of the UK”.