Banks to accept smartphone photos of cheques

Patrick Wintour
The Guardian
Treasury says it wants to speed up cheque payments and make it easier for businesses to use smartphone technology

British banks are set to accept photos of cheques sent by smartphone, cutting the processing time from six to two days, the Treasury said on Thursday – but it insisted that this was not the next step in phasing out them out entirely.

Banks to accept smartphone photos of cheques

The chancellor, George Osborne, is to consult next year on legislation to speed up cheque payments and make it easier for businesses and consumers to use smartphone technology. Consumers would also be allowed to send photos of cheques or go to banks with photographs of cheques in a move that mimic the way that plane tickets can now be printouts of emails.

In America, JP Morgan Chase introduced the cheque service in 2010, followed by Citibank and Bank of America. But in the UK, the law states the bank has a legal right to demand to physically see the cheque, especially if it is from a different bank, before it decides to honour it.

Welcoming the move, Steven Roberts, Barclays’ managing director, said: “When you can download a book or a film in seconds, we believe you should be able to deposit a cheque in the same way. This is just the beginning of how we want to transform the ‘cheque clearing cycle’ for our customers, driving down the six days it currently takes a cheque to clear.”

The Treasury said it accepts that despite debit cards, cheques remain crucial, with nearly £840bn-worth processed last year. This accounts for 10% of all payments made by individuals. A total of 23m cheques were sent as gifts since surveys show they are still the most trusted method of sending money through the post. But with cheques in overall decline, the Treasury said the new photo cheque would boost their status.

In December 2009, the banking industry announced that cheques were set to be phased out by October 2018, but the Treasury intervened in 2011, saying they remained popular with the public.

Businesses accounted for more than 370m cheque transactions in 2012. A total of 25% of payments made by small businesses were by cheque in 2012.

Barclays said it is planning to introduce mobile cheque deposit next year. Customers without smartphones would be able to use similar technology at cashpoints or branches, or continue to pay in paper cheques, as they do now.

Treasury financial secretary 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.”

John Allan, chairman of the Federation of Small Businesses, said: “Many of our members, and their customers, still rely on cheques so will be pleased with the investment and innovation to ensure their continued use. Speeding up cheque payments into business accounts is to be welcomed as many find the current process frustratingly slow. Using smartphones is an interesting idea which should allow firms in areas, particularly where bank branches are closing, to be able to accept cheques as a method of payment.”

Adrian Kamellard, Payments Council chief executive, said: “Whether it’s cheques, cards, electronic payments or cash the Payments Council believes that any innovation in the way we pay should be led by customer demand. UK customers already enjoy contactless technology on their cards; internet and phone payments at the touch of a button; and next year thanks to a Payments Council project it will be possible to transfer money safely from a mobile phone using only a mobile phone number.

Graham Fisher, chief executive of Toynbee Hall, said: “Financial inclusion is about meeting the needs of all the population, from those who prefer more traditional services, to people who embrace technological advancements. Having financial inclusive systems for the whole population is vital and this is an important step towards it.

The chief executive of Citizens Advice, Gillian Guy, said:”Cheques are an important, and sometimes vital, method of payment for many CAB clients. It’s good to see plans to bring cheques into the modern age with digital imaging and faster payments, alongside continued use the more traditional paper cheques. It’s important these developments don’t bring extra costs or barriers for consumers.”

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