The government has introduced new legislation that paves the way for people to deposit cheques by taking a photo with their smartphone.
The Small Business, Enterprise and Employment Bill will bring about changes to existing rules and allow banks to process cheques using ‘digital imaging’ technology.
It is hoped that the new payment method, offered in addition to standard deposit methods, will reduce transfer and clearing times from six days to two, and eventually make cashing a cheque faster than completing a Bacs transfer.
The digital payment method has proved popular in the US in the last decade, and Barclays has been running a trial of the digital cheque payments with UK customers.
In a consultation prior to the introduction of the bill, the Treasury warned that the payments industry will need to make use of “sophisticated” software to ensure that tampered-with images are not entered into the banking system.
Cheques remain a popular form of payment in the UK, accounting for transactions totalling £840 million 2012, and making up 10 percent of all payments made by individuals. It also remains a vital payment method for smaller businesses and traders.
“Key to the government’s long term economic plan is building stronger and safer banks that customers can trust,” said Andrea Leadsom MP, Economic Secretary to the Treasury. “We also want Britain’s consumers and businesses to have far greater choice in banking services and that’s why the legislation being published today is so important.”