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Proposed cheque processing reforms

By Chris Dawson August 6, 2014 - 8:08 am

Cheque scanningRetailing organisations that remain committed to the receipt of cheques as a means of payment will benefit greatly from the introduction of image-based cheque clearing technology.” That is according to Martin Ruda, Managing Director of the TALL Group of Companies, who is commenting on proposed legislation that would allow businesses to pay in cheques digitally.

The reforms are included in The Small Business, Enterprise and Employment Bill, which is currently awaiting approval after a HM Treasury consultation revealed there was widespread support for the image-based cheque clearing technology to be introduced.

Under the proposed changes, the time taken to clear a cheque will be reduced from four or six days, allowing transactions to be irrevocably completed within 48 hours. Plus the payment system will eradicate the cost of having to send cheques to the bank via a courier, or make a daily trip to the bank, although doubtless banks will still want to apply cheque processing charges for businesses.

This probably won’t affect marketplace sellers too much. Amazon stopped supporting cheque payments years ago and not many eBay sellers offer cheques as an option, However many businesses will still receive the odd cheque in the post regardless. Plus of course businesses with trade counters or retail outlets and especially those with mail order catalogues may still be receiving a fair quantity of cheque payments.

In anticipation of the legislation, the TALL Group is already working with retailers to streamline the internal operation associated with the processing of cheques. Mail order specialist Lakeland Limited receives between 1,000 and 4,000 cheques each working day. The company uses the Checkprint Banking Assistant Plus, a cheque imaging system that combines a desktop scanner to capture cheque images at point of receipt with comprehensive analysis software for reconciliation and archiving. Each morning the previous day’s cheques are passed through the automatic feed reader capturing the value, codeline details and full image of the cheque, dramatically reducing the time spent processing documents, saving both time and money.

Does your business still receive cheque payments? If you’re anything like me you’ll probably grumble every time you receive a cheque and then wander off to the bank when you have a big enough bundle to be worth paying in. Whilst I’d very much prefer to insist on electronic payments only, I’m not silly enough to refuse any reasonable payment option if it’s the customer’s preference. Getting payments in is of course what keeps a business running.

  • dan
    3 years ago

    cheques should be consigned to the technology of the past like floppy disks!

    i decline them when offered, as its too much hassle going to the bank, paying for parking, for what would be a value below £10 usually.

    although i am inpressed with the scanner for them, nice way to use tech. but i think they will be phased out once this generation errm.. expire.. im 28 and have never wrote one.

  • Mark
    3 years ago

    A small charity I volunteer for still gets quite a few cheques in (either from funders or members).

    Since outgoing mail needs to be taken to the post office, it is no more work to hand in the cheques at the same time.

    I find it a bit puzzling that cheques still make a journey round the country, being delivered to the bank that issued them (not an individuals branch though).

    Cheques also have a major security flaw, the information printed on them is enough to setup a direct debit to take money out of somebodies account. It would have been easy to change to a system where the cheques (vouchers) did not have this information on them.

    —–

    For charities the Paypal charity rate is a good option for taking online payments (all charities get the same rate as businesses with massive throughputs)

  • 3 years ago

    I am still very happy to receive cheques although I have not received one for ages. Then today I was sorting out some old correspondence and there in the middle of it was a cheque. Not a major one but a part of a ppi claim. So it is from a Bank and they seem very happy to send me a cheque.

    It may be a generation thing. I am 63 years old and in my lifetime I must have written out many thousands of cheques both when I was an Accountant in Industry and for my own purposes. We even had a programme that computer wrote cheques and computer signed them if they were less than a particular value.

    It is not that long ago, certainly in my lifetime, when there were few options except a Cheque to pay ones bills(you could always use cash but me in Cornwall paying a supplier in say Manchester the only option was a cheque).

    Mind you I have in the cupboard several cheque books. My Bank had a policy only a few years ago of scattering cheque books like confetti. I have several including a couple in an old obsolete name for the Bank. Certainly I expect to have enough to last me out.

  • dan
    3 years ago

    totally agree on the security, i remember a good while back – 5 years at least. jeremy clarkson put in his sun newspaper column his sort code and account number and was adamant that it couldnt be used.

    someone signed him up to a save the “animal” charity and they took payment.

    the next week in the column he said he was wrong and urged people to not do the same.

    • Mark
      3 years ago

      Faster payments (and BACS) has a similar security issue (although the other way round) as you need the same details to send money to somebody as you do to setup a direct debit from their account.

      Faster payments / BACS has very minimal error correction. The only data used to route the money is the sort code and account number. No attempt is made to ensure that the name matches so it is easy to send money to the wrong person.

  • John Florence
    3 years ago

    I can understand some negative views re payments by cheque
    in this current world of technology. However we all in the UK
    should appreciate the varied methods of choices to make our
    payments. The Payments Council agreed that cheques are here to
    stay, we have accredited regulated payment suppliers who professionally supply paper and electronic payment products, we
    can now enhance the cheque via image technology to create a
    quick deposit clearance to include regulated security features.

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