Here comes the photo cheque revolution
CHEQUE imaging, a new system designed to speed up and simplify the payment of cheques into an account, has been given the green light by the Government.
It recently finished a consultation with businesses, customers and lobby groups all keen to embrace the change as soon as possible to end frustrating delays and improve security.
The new process will allow customers to deposit cheques using just a picture of them taken on a smartphone or tablet computer – and the system could be here within two years.
The scheme should help reduce the risk of cheques being lost and shrink the time taken to clear payments from six days to two.
When the leap is finally made, it will be a relief for people who bank primarily online or who find it difficult to get to their branch in person. Some cannot get to their bank because of a disability, others live far from their nearest branch, while yet more never get round to paying in cheques.
Of the 718million cheques written each year a significant number go uncashed because customers overlook or lose them.
Kevin Mountford, head of banking at consumer website MoneySuperMarket, says: ‘This is a big move forward for the UK in terms of banking. While customers will still be able to write paper cheques as they do now, soon everyone will be able to use their smartphone to take a photo of a cheque they have received and pay it in by email or via your mobile banking app.
‘Ultimately, it is giving customers an extra way to choose how they bank.’
James Daley, of consumer champion FairerFinance, agrees. He says: ‘Cheques are one of the least secure methods of making payments. The current system is both expensive and inefficient. If we can find a way to digitalise it then that’s great news.’
Photo cheques are already used in some countries, including the US, which introduced a system of paying in cheques electronically soon after the terrorist attacks in New York on September 11, 2001 when payments ground to a halt.
Barclays Bank is nearing the end of a three-month trial of its ‘Mobile Cheque Deposit’ system, its version of cheque imaging, after it invited a group of customers to ‘opt in’ to the service.
They were iPhone-using custom-
-ers who had registered for mobile banking and had paid in at least one Barclays cheque into their account in the previous year.
But regardless of the outcome of the trial, the bank is unlikely to be allowed to roll out the scheme ahead of its rivals. This is despite the fact it could help iron out problems that occur when a customer pays a cheque into their account after visiting the branch in person.
Of the hundreds of cheque-related complaints received in the past year by the Financial Ombudsman Service, which mediates in disputes between banks and customers, the lion’s share relate to the clearing process.
Both banks and consumer groups behind the idea are quick to reassure cynics about threats to security and the danger of fraudsters tampering with photos of cheques.
They say the system is potentially more secure, so long as banks use tamper-proof software and could be done via a dedicated app on a phone or tablet, so the picture would not be stored on the phone or open to abuse.
But Daley adds: ‘It’s important that as new technology develops banks keep on top of security threats.
‘If new threats are created consumers can’t be left to deal with problems themselves.’