The good old reliable paper cheque has seen a renaissance over the last few months as it once again becomes a key element in what is termed ‘the Future Clearing Model’.
With The Small Business, Enterprise and Employment Bill passed by Parliament on 26 March 2015, this means that all banks will process cheques as images from October 2017.
One of the main benefits of an image-based system is that the cheque clearing process is to be speeded up, so cheque recipients will see the money appear in their bank account more quickly. Of course, once the cheque is paid-in, the person or business who wrote the cheque will also find that the money will leave their account more quickly too.
Individuals will continue to write paper cheques and give or post them to the payment recipient. However, banks may offer their customers the option of paying-in an image of the cheque – by using a secure mobile banking app on their smartphone or tablet, or by using a secure desk-top cheque scanning device – rather than having to go to the bank itself to pay it in. Whilst this will be a major benefit to some, there will be others who prefer to continue to use more traditional methods, either personally paying a cheque in at the bank, using the services of a third party cheque cashing service or BCCA member.
This will mean that those organizations will require the facility to scan and process the cheque image prior to passing into the clearing system, either via their bank, or directly into the clearing system. The big decision to be made by these institutions will be where and when to scan the cheque. Some will choose to do the scanning right at the point of receipt at the counter or paying-in window; others will want to perform the process at the branch or outlet back counter; some even to transport all the cheques from a local region to an operations centre or outsourced to a ‘lockbox’ for centralised processing.
This choice of scanning location will then dictate the type of cheque scanner to be used. For those businesses that receive only a small number of cheques in a day, typically less than 50 cheques per day, then a low volume single feed scanner could be used in the branch or outlet at the point of receipt. This will also allow the operator to inspect the cheque, its presenter and the cheque image for any fraudulent aspects.
Once the number of cheque receipts exceeds 50 cheques per day then high-volume remote deposit capture scanning equipment capable of handling hundreds or even thousands of cheques per day become more applicable. These use a dedicated “horseshoe” scanner with a multi-feed input and automatic scanning at anywhere from 50-165 documents per minute (DPM). The main distinguishing factor between these and other forms of lower volume scanners is the point at which the user experience of inserting cheques into a scanner one at a time becomes too tedious to justify using a cheaper single-feed device. In addition, these higher rate scanners can be readily connected to client installed software programmes to process and record the cheque images for audit purposes. These machines typically installed in branch or outlet ‘back-office’ environments where cheques are collected together for ‘batch’ processing.
The future of the cheque is assured, but the decision as to when and how it is cashed will remain a major customer choice.