As the payments industry whips itself into a frenzy around bitcoin, RegTech, and FinTech, the ‘good old reliable cheque’ is given an important new lease of life that the Government and the cheque clearing industry have been promising us for many years.
In our April edition, Finance Monthly speaks to Nathan Wain, Director at Solchar – the UK market leader in scalable payment and transactional imaging solutions, which was recently acquired by Hague Print, to find out what this means.
We have read recently in the press about the UK adopting an Image Clearing System, what exactly does this mean?
October 2017 will see all 11 member banks of the Cheque & Credit Clearing Company actually capture the image and data of cheques and use that electronic information to clear funds into payees’ accounts. With cleared money arriving into recipients’ hands no later than the next working day after deposit, the use of cheques suddenly becomes a different proposition. This change in legislation is significant for UK businesses, as the digital image of a cheque will replace the paper instrument and will substantially reduce clearing times from six to one working day. This will result in a huge cash flow benefit to individuals and businesses.
Nobody uses cheques any more though, do they?
Physical cheques still represent 10% and circa £1trn of all payments made. Nine out of every ten businesses still process physical cheques. There is a large demographic of people and companies that still prefer to use cheques. Now, with the introduction of cheque imaging, a much larger proportion of the population will be able to use this method of payment with ease and will not be limited by receiving payment through BACS or card payment. More importantly, it will also result in people not having to hand over their private banking details to unknown people.
Will this lead to more cheque fraud?
Cheque imaging provides new opportunities to combat fraud and tackle security threats that currently affect cheque users. Due to reducing the time lag, between when a cheque is written and money is being moved between accounts, cheque imaging helps eliminate types of cheque fraud that could take place within this time. Furthermore, similarly to what happens with card payments, banks will be able to contact the customer if they detect any suspicious behaviour, regarding cheque imaging.
Will the UK clearing system be ready in time?
Solchar has conducted trials with a large cross section of cheque users over the past few years. The trial has been an enormous success and we are currently working with many building societies and agency banks to make sure they too are ready. Electronic transfer of data and digital images enables payments to be sorted by computerised system at the clearing centre and directly transferred to corresponding payee via their paying bank. The process of data matching works better with the digital images instead of paper copies.
In summary, not only will each clearing institution be in possession of proof of transaction and able to perform dual control in verifying and authenticating financial transactions, but they will also save a significant amount of money and time by avoiding the need of processing, transportation and storage of physical cheques. More importantly, electronic cheque archives can be easily backed up and retrieved at any time, eliminating the risk of data loss.
So is this just helping the big financial institutions save money?
No, the real benefit to this change in legislation is the ability of individuals, small businesses, corporates and agency banks to use mobile or desktop scanners to remotely deposit cheques as soon as they are received. This means it is processed from the work desk or home without the need to physically go to the bank or building society. The ‘Remote Deposit Capture’ (RDC) concept, which first swept North America, will be a major benefit for UK businesses and consumers. Solchar are the only UK company to work with the 3 major cheque scanning companies – Digital Check, Panini and Cannon to provide a scalable solution for financial institutions and corporate customers alike.
Any final thoughts?
The cheque market has moved on, this all important and dependable payment method is meeting with new found enthusiasm, which will make life for UK cheque users far more efficient.
About Hague Print
Hague Print is a leading UK print solutions provider established in 1980, privately owned and a founder member of the Independent Print Industries Association (IPIA).
Offering an extensive range of business printing solutions, Hague is also a full member of the International Hologram Manufacturers Association (IHMA) and our management procedures are fully compliant with BS EN ISO 2015. At Hague we offer our customers outstanding, end-to-end solutions and printed documents for clients across the globe that offer the highest levels of security currently available on the market today. Operating in more than 50 countries worldwide, Hague offers a single point of contact for high quality and innovative bespoke print solutions to blue chip clients, international banks, governments, universities and sporting venues across the globe.
Design, innovation and software development sit at the heart of everything Hague does, we provide the most comprehensive range of brand protection, secure printing and cheque imaging solutions available in the market today.