Every now and then a news story appears which claims the death of cheque usage is only a hare’s breath away. Yet, here we are in 2016 and not only are cheques still being used in their millions – 700 million to be precise, but technology and Government legislation is also evolving to support their continued use.
It may seem like an outdated method of payment to many who have fully embraced the world of contactless payment and online banking. But the reality is cheques still account for a significant number of transactions in the UK. Recent figures show 38 per cent of consumers still use cheque payment and so do more than half (55 per cent) of businesses*.
Although cheque usage isn’t what it was 20 years ago, when more than four billion were used, an estimated 256 million are expected to be in circulation in 2024*, which begs the question why have so many written off cheque when it holds so much potential – especially to business?
Processing times for cheque payments have always been of benefit for the payer, whose money stays in their account a few days longer, and of detriment to the recipient who has to wait longer for his money than he would have to had the money been paid electronically.
But in 2017 new legislation looks to create a compromise which will keep the cheque alive and kicking with the introduction of digital imaging to speed up the cheque clearing processes.
Until then the law dictates banks physically need to transport cheques to central clearing centres, where the details are read and confirmed. Cheque code-line data is sent across a secure network to other banks and the cheques are exchanged as well. It is a slow and labour intensive process, but until the law changes it’s necessary as it is a banks right to ‘see’ the cheque before they decide whether to pay it or not.
Cheque imaging will reduce the level of labour involved in the whole process markedly. Banks or business partner organisations, such as Parseq, will be able to scan the cheque directly to the payer’s bank across a secure network.
We conservatively estimate we handle on average, 25,000 cheques a day on behalf of our financial services clients and this change will, without question, transform and improve how these payments are processed.
Banks are already gearing up for the expected changes. Last summer Lloyds launched a four-week trial among 1,700 staff who tried out its mobile cheque imaging technology and it’s understood 30,000 Barclay customers are already using similar apps from their iPhones.
What impact do you think the changes will have on cheque processing? It’s a topic we’ll be talking about in the weeks to come, so why not share your thoughts with us on Twitter @ParseqBPO.
*Cheque & Credit Clearing Company: 2015
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By Craig Smith, Managing Director of Finance & Administration, Parseq.