Speeding up cheque payments: legislating for cheque imaging

The government is committed to ensuring that the UK’s payment systems are innovative, efficient and reliable, and that they meet the needs of end users. Cheques continue to form a vital part of the British payments landscape, with nearly £840 billion of cheques processed in 2012, accounting for 10 per cent of all payments made by individuals. The government has already taken a number of steps to ensure that the banking industry provides individuals and businesses with a choice of payment methods that meet end user needs. Following pressure from the Treasury Select Committee and the government, the banking industry reversed its 2009 decision to close the central cheque clearing system, and instead the banks agreed to provide cheque services for as long as customers needed them. In 2013, the government legislated to introduce a new Payment Systems Regulator, which will be equipped with a full range of powers to promote competition and innovation in the payment systems market and to ensure that systems are operated in the interests of end users.

The government is now taking a further step to support ongoing innovation in UK payments and secure the future of cheques. The government is setting out proposed legislation which will allow for the introduction of ‘cheque imaging’, an innovation that speeds up cheque clearing times by sending a digital image of the cheque for clearing, rather than the piece of paper itself. The proposals will enable a wide range of benefits to be delivered to consumers, businesses and the banking industry. These benefits include faster clearing times, greater customer convenience, a more efficient payment system, and added security measures to ensure the payment system is robust and reliable to use. Cheque imaging is already established in the USA, France and parts of Asia.

This consultation sets out the case for cheque imaging, the key legislative changes that are considered necessary to support its introduction in the UK, and lists the consultation questions. The Treasury invites responses on the specific questions raised. The questions can be found throughout the document and are listed in full in Chapter 3.

The consultation should be read by those with an interest in cheques and the operation of the cheque payment system, this includes banks, building societies and other payment service providers, businesses, trade bodies, consumer groups and other interested parties.

Email your response to: chequeimaging@hmtreasury.gsi.gov.uk

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Respond to consultation questions via LinkedIn.