The government is to consult on the use of digital scanning technology using smartphones to process cheques as part of a move to make cheque depositing easier and quicker for small businesses which process large numbers of cheques.

New legislation will be introduced to speed up cheque payments from the current maximum six days to two, by allowing banks to process images rather than paper as they do today. Consumers and business customers would then be able to take a picture of a cheque on their smartphone, or at a bank cashpoint or branch, which is then sent to the bank's processing department.

'Cheque imaging' technology does not require a hard copy of the cheque to be present at every stage of the paying-in process. That means that time spent transferring it between different banks and central clearing depots is saved as well as reducing the overall costs.

The government says businesses are likely to benefit as they accounted for over 370m cheque transactions in 2012, while 25% of payments made by small businesses were by cheque in 2012.

John Allan, national chairman, 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.'

The new cheque handling approach will be piloted by Barclays Bank. Steven Roberts, managing director, Barclays said: '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. We are planning to test the cheque imaging technology early in the New Year with a range of customers.'