- New system to be introduced on 30 October 2017, when a phased roll-out begins
- Cheque clearing time to be reduced from ‘six weekdays’ to ‘next weekday’ 1
- Cheques to remain a key part of the payments landscape; customers will still write cheques in the same way and will still be able to pay-in cheques as they do today
The Cheque and Credit Clearing Company (C&CCC) - the organisation that manages the cheque clearing system - has today announced details of the launch of an industry-wide image-based cheque clearing system that will speed up cheque processing significantly for customers across the UK.
The new system will go live with some banks and building societies from 30 October 2017. Then, at some stage in the second half of 2018, all of the UK’s banks and building societies will clear all cheques via the image-based system to the faster timescale. Over time, increasing numbers of cheques will be cleared using the new system and more and more customers will benefit from the faster timescale, until such time in the second half of next year when all cheques will clear more quickly. The precise date as to when this will happen will be announced by the industry in due course. Banks and building societies will also advise their customers at the appropriate time regarding their individual roll-out plans.
For customers, the new system will mean that if they pay in a cheque on a weekday they will be able to withdraw the funds by 23.59 on the next weekday (excluding bank holidays) at the latest, with many banks and building societies likely to allow customers to access their funds earlier than this. Introduction of the new process will also mean that when a cheque is paid in, not only will the recipient receive the money in their account more quickly; the money will leave the account of the person or business that wrote the cheque to the faster timescale too.
Customers will still write cheques as they do today, and give or post them to recipients in exactly the same way as they always have. Cheque recipients will still be able to pay in cheques in the normal variety of ways, such as at a bank or building society, by post or at an ATM. This continuation of regular customer practice is particularly important for charities, which receive many donations via this payment method; and for any other people that may prefer to carry on using cheques in exactly the same way as they always have.
However, cheque imaging is also about providing more choice, and it means that some banks and building societies may offer 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 bank to pay it in. Although this is likely to be a more convenient method for some, customers will still have the option of paying in cheques in exactly the same way as they do today, so there is absolutely no requirement for customers to use a smartphone or tablet to pay-in a cheque if they don’t want to.
Some banks have already rolled out imaging technology for some of their customers, but only for those situations where they receive a cheque from another customer of the same bank. However, providing customers with these new ways to pay in cheques is a competitive matter so not all banks and building societies will be offering them.
Ultimately though, the new system will see cheques from all banks and building societies cleared via image to the faster timescale, even when the cheque writer and cheque recipient are with different banks and building societies.
James Radford, Chief Executive Officer of the Cheque and Credit Clearing Company, said:
“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. 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."
For more information about how the new process will work visit: www.chequeandcredit.co.uk/cheque_and_credit_clearing/cheque_imaging/.
Cheque imaging fact sheets are available to download from www.chequeandcredit.co.uk/resources_and_advice/factual_publications/.
1Weekday: Monday to Friday (excluding bank holidays)
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Notes to editors:
At the moment, the UK sterling cheque clearing process involves the actual paper cheques being physically transported around the country, and 2-4-6 maximum timescales apply to the cheque clearing process. After you pay in a cheque, it takes: up to two weekdays* before you earn interest; four weekdays before you can withdraw the money; and six weekdays before you can be absolutely certain that it won’t be returned unpaid. Under the new system, you will be able to withdraw the funds - and be certain that the cheque won’t be returned unpaid - by 23.59 on the next weekday after you have paid-in a cheque. However, this is a maximum timeframe, and many banks and building societies are likely to allow customers to access their funds earlier than this.
* A ‘weekday’ is defined as Monday to Friday, excluding bank holidays. Banks and building societies will advise their customers accordingly of individual cut-off times regarding the latest time a cheque needs to be paid-in by, and by what method, to ensure the funds from that cheque will be available on the next weekday.
Although cheque usage is in decline, 477 million were written in 2016.This shows that cheques are still important for certain groups and in certain situations. As such the Cheque and Credit Clearing Company has taken steps to improve the cheque clearing process to ensure that cheques can be sustained for those consumers, charities and businesses that use them.
A key part of the C&CCC’s industry-wide cheque imaging project is to continue to engage with all relevant stakeholders– this includes: cheque users; consumer groups; charities; businesses; and the 400 or so banks and building societies that have customers who write or pay in cheques.
Secure and reliable
The new clearing process will be as secure and reliable as the one we use now and, once the technical infrastructure changes are finalised, the industry will begin its building and testing programme. Robust security measures will be built into the new process to ensure customers continue to be protected. As with the situation today, customers will not foot the bill if they are an innocent victim of cheque fraud.
Imaging around the world
The UK will not be the first country in the world to introduce cheque image processing, and therefore can learn from the experiences of other countries that have introduced similar systems. The USA, France and much of the rest of Europe, India, China and some other Asian countries have image-based processes in place.
The introduction of cheque imaging required a legislative change and, following on from a consultation into speeding up cheque payments that ran from March to April 2014, the Government published its conclusions on 25 June 2014, along with the draft enabling legislation within the Small Business, Enterprise and Employment Bill. The approved Bill received Royal Assent in March 2015, and the enabling legislation came into force on 31 July 2016.
The Cheque and Credit Clearing Company (C&CCC) is a non-profit making industry body, which has managed the cheque clearing system in England and Wales since 1985, and in all of Great Britain since 1996 when it took over responsibility for managing the Scottish cheque clearing. As well as clearing cheques, the system processes bankers’ drafts, postal orders, warrants, government payable orders and travellers’ cheques.
The company also manages the systems for the clearing of paper bank giro credits (the credit clearing), euro cheques (the euro clearing) and US dollar cheques (the currency clearing for US dollar cheques drawn on London banks).
The Belfast Bankers' Clearing Company Limited (BBCCL) is a non-profit making industry body. It was set up in 2007 as a means of formalising the existing rules and standards for the sterling cheque and credit clearing in Northern Ireland.