The new system will be introduced on 30 October 2017, when a phased roll-out begins and cheque clearing time to be reduced from six working days to next working day.

The Cheque and Credit Clearing Company (C&CCC), the organisation that manages the cheque clearing system, has announced details of the launch of an industry-wide image-based cheque clearing system that will speed up cheque processing significantly for customers across the UK.

Cheques will remain a key part of the payments landscape; customers will still write cheques in the same way and will still be able to pay-in cheques as they do currently.

The new system will go live with some banks and building societies from 30 October 2017.

Then, in the second half of 2018, all of the UK’s banks and building societies will clear all cheques via the image-based system to the faster timescale.

Over time, increasing numbers of cheques will be cleared using the new system and more and more customers will benefit from the faster timescale, until such time in the second half of 2018 when all cheques will clear more quickly.

Although cheque usage is in decline, 477 million were written in 2016, a 14.5% decline from 558m cheques written in 2015. Cheques are still important for certain groups and in certain situations, particularly for charities and businesses that use them. The average value per cheque cashed is £1,125.

Over the last year, nearly 9 in 10 UK charities and two thirds of UK businesses both received and made payments by cheque over a monthly period.

The precise date will be confirmed by the industry in due course. Banks and building societies will also advise their customers at the appropriate time regarding their individual roll-out plans.

For customers, the new system will mean that if they pay in a cheque on a weekday they will be able to withdraw the funds by 23.59 on the next weekday (excluding bank holidays) at the latest, with many banks and building societies likely to allow customers to access their funds earlier than this. 

Introduction of the new process will also mean that when a cheque is paid in, not only will the recipient receive the money in their account more quickly; the money will leave the account of the person or business that wrote the cheque to the faster timescale too.

Some banks are already offering customers a secure mobile banking app on their smartphone or tablet, and this will be rolled out more widely. The current system is limited to situations where the cheque emanates from the same bank.

The new system will see cheques from all banks and building societies cleared via image to the faster timescale, even when the cheque writer and cheque recipient are with different banks and building societies.

James Radford, chief executive officer of the Cheque and Credit Clearing Company, said: ‘These changes will put cheques firmly in the 21st century, delivering real and important benefits for the many individuals, charities and businesses that regularly use cheques. 

‘Not only will cheques clear faster but banks and building societies may offer their customers the option of paying in an image of a cheque rather than the paper cheque itself.’

Information about how the new cheque clearing process will work is available here

Cheque imaging fact sheets are available to download here

Report by Sara White