/ Money, Technology

Embrace the cheque’s digital makeover

Digital cheque imaging

We know that lots of you still love using cheques. The question is, do they have a future? Could giving them a digital makeover be a great way of keeping them alive?

We are a step closer to being able to pay cheques into the bank using our smartphones, after the idea, known as cheque imaging, was strongly supported in a government consultation.

The new system will mean that banks can clear a cheque by presenting a digital photo of the document to the payer’s bank, rather than sending the original as at present. That could mean cheques clear in as little as two days, and opens up the possibility of paying in cheques simply by photographing them using a mobile banking application on a phone.

The technology has already been successfully used in other countries, including the US and France. To make it happen, the banks will have to overhaul their systems, and the laws regulating cheque clearing, some dating from 1882, will be updated.

Digital cheque imaging

Almost 75% of people in the UK own a smartphone, according to Deloitte, while ING found that 31% already use mobile banking apps. Digital imaging should breathe new life into the 300-year-old cheque, and will be especially handy for those who find it difficult to get to a bank branch. If banks get the technology right, it could also be more secure than sending a cheque by post.

Not everyone is comfortable with mobile banking, and the Government says that its legislation will force banks to continue to provide traditional methods for paying in cheques. It’s vital that this happens, so that the cheque system remains accessible to all.

Banks should offer the technology as a new option – and avoid the temptation to see it as another reason to strip back the face-to-face banking experience that so many customers still value.


Dual signature authorisation is possible with some banks such as CAF and Unity Trust Bank. Most of the rest of Europe except France and Ireland have ceased using cheques and use either electronic banking, debit cards or giro system. In each case the payer transfers the money directly into the payee’s bank account. The giro system works very similar to a cheque except that the payer needs the payee’s sort code and account number then sends the details on a giro slip to his/her own bank to be paid directly to the payee’s bank. If it works in the rest of Europe and has done for the last 50 years in some places then there is no reason it cannot work here.

Bob – In this and several other conversations I have pointed out that cheques are very important for small charities. Others have agreed with me.

A cheque or cash can be used anywhere and at any time to make and receive payments. Though I prefer to use online banking, there are times when it is convenient to send a cheque, which can be done without knowing account numbers, sort codes and using a computer. I used to give gift vouchers to friends and family but having had some problems I now use cheques. There are plenty of people who are uncomfortable with using computers and have no clue about security issues.

Cheques avoid the risk of carrying around large amounts of cash. If we lose cheques, some people will be carrying around more cash and sending it by post.

I am not keen to send and receive cheques but I recognise that they have an important role in a society where we care about everyone’s needs.

Wavechange – I clearly didn’t explain why giro works effectively as a replacement to cheques in most European countries.
Giro is a paper based system that works in a similar way to a cheque but is more secure. Usually the giro form is created by the payee with the bank details and the amount. With clubs and small charities it can often include the payer’s name and reference/membership number. With a business it is often at the bottom of the invoice and is like the paying-in slip that you see on many bills which is often a giro form; you will often see “Bank Giro Credit” printed on the form (have a look at a Council tax bill). Business’s and charities can publish their details even small clubs can give those details to their members, perhaps on their membership renewal notices. The difference is that the transaction is instigated by the payer passing the giro slip directly or in the post to their own bank, rather than the payee passing it to their bank who then have to pass it on to the clearing system to ask the payers bank to transfer the money on to the payee’s bank account. The system removes at least two stages and the time and cost implications from the system. It is also the same mechanism and flow as internet banking payments, hence simplifying the system.
Of course the system would mean a change which is always a problem for people to accept but I believe in the medium and long term would be not only more cost effective for small charities and clubs it would be easier to administrate and would incur lower error rates. Just think how many cheques you receive without signature or not in the name that you expected with the wrong amount or not dated. One of the charities I work with estimate the current error rate is often as high as 10% on membership renewal.

Bob – Thanks for your suggestion of using Giro. One of the societies I’m a member of encourages members to set up standing orders but when the membership subscription changes, few remember to update their payment. I’ll suggest this to our Treasurer.

Unfortunately, it will not help me when I collect donations from small groups of people on trips that I run for a charity. We don’t charge but take donations and usually get more than expected on the day. If people have thoroughly enjoyed themselves they can be very generous. Some pay cash and some pay by cheque. I check for missing signatures and Gift Aid forms that have not been completed properly. I don’t want to deal with cheques or bundles of cash but see no practical alternative for making impromptu payments. I use various small companies and some of them ask for cheques or cash when I ask how I should pay.

If you trawl Which? Conversation and other websites you will find numerous examples of why individuals find cheques necessary. About the only time I choose to use them is when sending a birthday card with a cheque enclosed. (Rather impersonal, I know, but perhaps better than giving young people something they don’t want.)

Please could we acknowledge that there IS a need for cheques at present.

Clearly the arguments made in favour of keeping cheques have been accepted – the earlier decision to withdraw them has been reversed.
We often hear this argument “some don’t like change” as if change, per se, is always good. It is not – the ramifications of a change and unintended consequences are not always thought through, particularly for issues that have gradually evolved and been refined. It is for us to look at change critically before we accept it.

I see that Waltham has been awarded Comment of the Week for his contribution on 31 July, explaining why getting rid of cheques would be a problem for some small businesses.

He did indeed get our Comment of the Week 🙂

Irene, Manchester says:
9 August 2014

I order quite a lot of items online using my Visa debit card but this means that my “Inbox” is inundated with special offers etc. every day from various mail order companies who automatically
put me on their mailing list. I don’t mind if it is a company I regularly deal with but there are many occasions when I prefer to send a cheque to cut the number of nuisance emails I receive , especially when it is a one-off purchase. Some mornings I can have a dozen or more messages from companies I have dealt with in the past. I know i can put them on my black list for receiving messages but the volume I receive is getting beyond a joke. I find the convenience of sending a cheque reduces this, although some companies add you to their “snail mail” post, which I automatically put in my waste paper collection bin.