New technology: Pay in cheques from your smartphone

Following the U-turn on Government plans to remove cheques from 2018, plans are now being put into place which will enable people to pay in cheques by sending an image of it to their bank with their smartphone.

The UK Payments Council faced a backlash from small businesses, charities and pensioner lobby groups when they announced plans to drop cheque payments two years ago. The Government has described cheques as a “crucial” part of the British payments landscape, and consequently are looking into options which could cut the length of time that it takes to process cheques to just two days, from the current six days.

The technology which is being considered, where banks are able to use images rather than just paper, is already widely used in the United States of America.

Current UK law pemits a bank to demand to see a copy of the original cheque before deciding whether to honour it. “Cheque imaging” does not need a hard copy of the cheque to be present at every stage of the paying-in process. As a result, the delays caused by transferring cheques between different banks and central clearing depots are significantly reduced, as well as associated costs of dealing with cheques. People without smartphones will also be able to use similar technology at cashpoints or branches, but will also have the option of paying in paper cheques as they do currently.

Barclays plans to pilot the technology which will enable customers to scan cheques using smartphones or tablets early in the New Year, and are planning a full launch later in 2014.

Whilst online banking and mobile payments are becoming increasingly popular, almost £840 billion worth of cheque payments were processed last year, which accounted for 10% of all payments made by individuals.

The Financial Secretary to the Treasury, Sajid Javid said: “This Government is determined to create a banking sector that works for consumers and serves businesses.

“We want to see more innovation so that customers see the benefits of new technologies. That is why we’re creating a new payments regulator and why we are going to consult on speeding up the cheque clearing process.

“We want to take the very best of the current system and make it better. We want cheques to have a crucial role in the on-going success of the UK.”