2009 saw the C&CCC celebrating the 350th anniversary of the cheque. At the time, all the company could see was the cheque in decline. Volumes had been falling in the UK for over twenty years and at double-digit rates for the most recent years, as consumers and businesses increasingly adopted automated payment methods, online banking and mobile banking. However, cheques remain an important part of the payments landscape even as the 21st century progresses.
Our market research shows that nearly 9 in 10 UK charities and two-thirds of UK businesses both received and made payments by cheque over a monthly period. Nearly four in ten personal account holders who write cheques expect they will write as many cheques in next three years as they do at present.
With the future of the cheque assured, the C&CCC began extensive research to find a method of clearing cheques that utilised 21st century technology - thus improving the speed and efficiency of the cheque clearing process in a world of declining cheque volumes. In December 2013, the C&CCC Board gave the go-ahead for the implementation of an image-based method of clearing cheques.
There is much work to be done before cheque imaging can become a reality. One of the first stages in this process was a requirement for the law to be changed, eliminating the need for cheques to be physically transported around the country. This change occurred via the Small Business, Enterprise and Employment Act, which gained Royal Assent in 2015. The Government is now working on the regulations to underpin the new legislation.
Meanwhile, the C&CCC is working with the banking industry to agree the changes to the infrastructure and technological capabilities that are required before the Image Clearing System (ICS) can be introduced.
Once the new system is fully introduced, all of the UK’s banks and building societies will be clearing all cheques, via the image-based process, to a faster timescale. It will mean that a customer who pays in a cheque on a weekday 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 customers to access their funds earlier than this.
The company is now a payment system regulated by the Payment Systems Operator (PSR). The PSR has three statutory objectives:
- to promote effective competition in the markets for payment systems and for services provided by those systems;
- to promote the development of innovation in payment systems, in the interest of service-users; and
- to ensure that payment systems are operated and developed in a way that considers and promotes the interests of service-users.
With the introduction of the Image Clearing System and the advent of regulation by the PSR, the C&CCC hopes it has secured the brightest of all futures for the cheque.