Cheque imaging is the process that enables images of cheques to be exchanged between banks and building societies, through the Image Clearing System, for clearing and payment. This significantly speeds up the clearing process.
You will still write paper cheques as you do now, but if you receive cheques you may be offered new ways of paying them into your bank or building society account. You will still be able to pay cheques in at a branch counter just as you do now. An image of the cheque will be created by the bank or building society when the cheque is paid in and it will be this image that will be exchanged electronically through the new system between the relevant banks and building societies.
In addition, if your bank or building society offers this service, as a personal or small business customer you will be able to image cheques you receive using a secure imaging tool on your mobile banking app and then upload the images for paying in and processing by your bank or building society.
If you are a corporate or charity customer you may be offered a scanning facility by your bank so that you can scan large numbers of cheques yourself to create images, which you will then be able to upload to your online bank for processing.
Cheques processed through the new system clear more quickly. It means that if you pay in a cheque on a weekday (before your bank’s advertised cut-off time) you will be able to withdraw the funds by 23:59 on the next weekday (provided that the cheque has not bounced). However, 23:59 will be the latest timescale that banks and building societies will be working to and many are likely to allow their customers to access their funds earlier than this.
It takes six weekdays (bank holidays excluded) before you can be absolutely certain that your cheque won’t bounce when it clears via the paper system.
No. 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. 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. Banks and building societies are working towards clearing all cheques to the faster timescale, via the Image Clearing System, and the rollout of this new system is continuing in 2019.
Until then, two clearing systems will operate in parallel, which means that some cheques that customers write or pay in will clear more quickly via the image system, and some will clear to the existing, six weekday timescale through the current, paper-based system. Banks and building societies will be advising their customers of their individual roll-out plans as appropriate.
The launch of cheque imaging will involve a phased roll-out, with all banks and building societies deciding on an individual basis when they are going live. However, at this stage, even if a bank is ‘live’, only a small number of cheques it receives are likely to be processed through the new system. A variety of factors might decide which cheques will be cleared more quickly, such as:
- How the cheque is paid in (e.g. over the counter, by post, at an ATM, via a mobile banking app).
- Where it is paid in (some banks may decide that certain branches are involved from launch, but the vast majority of cheques paid in at branch counters are unlikely to clear through the new system until later in the year).
- Whether the person paying in the cheque belongs to the same bank as the person or business who wrote the cheque.
For more information on whether a cheque that you pay in will clear through the new system or the existing system contact your bank or building society.
The introduction of faster cheque clearing has involved the creation of a completely new payments system – it is not a simple overhaul of the existing clearing process. The complexity of the project, coupled with there being many financial organisations that need to come together to deliver this technological leap-forward for the cheque, means that there will be a phased introduction rather than an industry-wide launch from day one.
Your bank or building society will be able to provide you with more information regarding how quickly your cheques will be cleared.
No. During the phased roll-out customers will not be able to choose which system is used to clear their cheques. However, at some stage in the second half of 2018, all cheques will be cleared through the image-based system and the paper clearing system will stop operating.
Very few cheques will be processed through the new system to begin with. The vast majority of cheque users won’t experience any of their cheques being processed through the new system for a number of months.
Yes, the new system will be UK-wide. The C&CCC has worked with the Belfast Bankers’ Clearing Company to ensure that banks and building societies in Northern Ireland can clear their cheques through the new system along with all the banks and building societies in Great Britain.
477 million cheques were used for payments and to acquire cash across the UK in 2016, showing that cheques are still an important part of the payments landscape. To improve the efficiency and speed of the clearing process, the C&CCC has chosen a method of clearing cheques that uses 21st century technology. This will help protect the future of cheques so that customers can use them for as long as they want.
Cheque clearing timescales will be faster - the funds from a paid in cheque will be available to you more quickly. The new system speeds up the time it takes a cheque to clear from six weekdays to the end of the next weekday (bank holidays excluded).
The future of the cheque is secured - the move to image processing will help protect the cheque so that you can continue to use them for as long as you want.
Some banks and building societies may offer additional ways to pay in cheques - some banks and building societies will give their customers the additional option of paying in an image of the cheque – by using a secure mobile banking app on their smartphone or tablet – rather than having to go to a branch to pay it in.
You don’t have to do anything differently if you don’t want to - you will still write cheques and give them or post them to recipients just as you do now. If you want to carry on paying in cheques as you do at the moment, you will still be able to do so.
More competition and more choice - the new system will make it easier for new challenger banks to connect to the new system and enter the market with cheque products, which could increase competition within the sector. More competition means more choice and this should lead to better products for you.
The terms and conditions of your bank account will explain how long it is advisable to retain the paper cheque for and at what point you will be able to dispose of it, preferably by ripping it up or shredding it.
Most banks enable their customers to pay cheques into their bank accounts at a Post Office – you should check with your bank to make sure. It is likely to take an additional weekday (maybe two) to clear the cheque under cheque imaging, as is the case with the paper clearing. This is because the cheque clearing timescale only starts once the cheque or cheque image has reached your bank. You will need to check your bank account’s terms and conditions for more information on this.
Yes. You have a legal right to stop a cheque before the cheque has been paid (Bills of Exchange Act 1882). However, there will be significantly less time to do this with cheque imaging as the clearing timescales are much quicker and the recipient might pay in the cheque via a mobile banking app, which means that the clearing process will begin sooner than if the cheque recipient has to visit a bank branch to pay it in. There are also limited circumstances in which stopping a cheque is permissible, as has always been the case. You should talk to your bank or building society first.
If a cheque cleared via the new system is returned ‘not paid’ you will receive notification more quickly than at present. Your bank will agree with you how it will notify you and will tell you the reason why the cheque has not been paid. Your bank will have the cheque image, which will be the legal instrument. This will provide the bank with all the information it will need if you ask it to re-present the cheque (if it offers this service).
In-built security and checks will help prevent fraud throughout the clearing process so, provided you have kept to the terms and conditions of your account and you have not been negligent (for example, signing and handing someone a blank cheque), you will be protected if you are an innocent victim of fraud, just as you are now.
No, not if you don’t want to. The new system enables banks and building societies to offer image tools on their mobile banking apps if they wish, so that you might be able to use your smartphone or tablet to pay in cheques for processing, rather than visiting a branch. However, if you want to carry on paying in cheques as you do at the moment, you will still be able to do so.
You will need to speak with your bank or building society to find out if it will be offering its customers the option of paying in a cheque via a mobile banking app. If it does offer this option, then it will provide more information about how and when the upgrade to the app will happen.
No, it will be at the point that the recipient pays it in to their bank account that a paper cheque will be imaged – you will still write cheques and give or post them to recipients just as you do now.
Yes, you will still be able to use your existing chequebook.
Yes. The new system will process all of these as well as cheques.
Yes, the new system will also process bill payments accompanied by cash or cheque. So, when you pay a utility bill at the branch counter by cash or cheque, the accompanying bank giro credit will be turned into an electronic message that passes through the Image Clearing System to the bank of the utility company concerned, to pay your bill. This will be to the new timescales too.
Yes. HM Treasury published a consultation exercise on 3rd November 2017 inviting views on the proposals for two measures in secondary legislation. The aim of this legislation is to ensure that the new system has no detrimental impact on the existing position of cheque users.
The proposed legislation will provide:
- that a copy of a paid cheque, in image form, will be provided to the payer upon their request, and that the copy can be used as evidence of payment.
- that if a customer incurs a loss in connection with the presentment of a cheque under the ICS, and has not received compensation, the payee’s bank must compensate the customer for the loss.
The Government published its response on 30th April 2018 and has laid the legislation before parliament, and is aiming for the legislation to become law later in 2018. Full details of the consultation can be found here: www.gov.uk/government/consultations/legislation-to-support-cheque-imaging
The introduction of an image-based system makes no change to fraud liability but the secondary legislation is welcome news for customers as it aims to ensure that cheque imaging has no detrimental impact on the existing position of cheque users. It is important to note that this legislation does not override scheme rules regarding compensation. However, the introduction of cheque imaging represents a significant change to the way cheques are processed and the legislation ensures that a customer is not left out of pocket when they are an innocent victim of fraud and have followed their bank’s terms and conditions.
Changes to the law state that an image of the cheque will now be evidence of payment. Your bank will be able to provide you with images of cheques for these purposes.
No. The new system will process sterling cheques, postal orders, travellers’ cheques, bankers’ drafts, dividend cheques and bill payments drawn on UK banks and paid into a UK account in the UK, but not foreign currency cheques.