New Cheque Clearance Rules

saxmund

Mikeyorks wrote: »

But the Clearing cycle is about paper based cheques .. so it's not all 'by computer' ... The initial part (whether the cheque went into a Bank / CC company / HMRC et al) is done by Clearing Centres overnight. They then put the cheques into Central Clearing at Milton Keynes - who reprocess / sort them all ... create electronic files for the drawer banks. And then send the paper on to the drawer banks. That process is not going to change .. nor do I expect to see it move from Mon - Fri only.

Thank you, that makes sense. I had assumed that once your cheque had been paid into your bank, the process became purely electronic. Of course it could be done this way, with the cheques being retained by the bank purely in case of future query, but I imagine with cheques rapidly becoming obsolete there's no real incentive for the banks to spend money on changing the system. In fact, the continued slowness of cheques is an incentive for people to prefer electronic payment methods.

On the other hand, why can't electronic BACS transactions happen on non-working days? There's no paper to send to MK. Or will this change when faster clearing (eventually) is introduced?

Mikeyorks

saxmund wrote: »

Thank you, that makes sense. I had assumed that once your cheque had been paid into your bank, the process became purely electronic. Of course it could be done this way, with the cheques being retained by the bank purely in case of future query, ?

The image based machinery to convert cheques to data is pretty impressive - and it's costly. Hence most Banks don't process their own cheques - they send them, by courier, to clearing centres which process them through the night. Then into Clearing for 100hrs next day. The intention was that those centres would create the electronic files - and retain the cheques - a process called truncation. But that's disappeared from the agenda. It was going to be a complex process and I suspect the banks decided to hide behind the increasing redundancy of cheques as a welcome excuse.

saxmund wrote: »

On the other hand, why can't electronic BACS transactions happen on non-working days? There's no paper to send to MK. Or will this change when faster clearing (eventually) is introduced?

'Faster payments' .... promised for (prev Nov 07 .. now) May 08 will mainly resolve that. But still a bit unclear if that will be the default or there will be a (modest?) fee.