Cheques to be paid via smartphones in UK?

In an innovative move, British banks may soon allow customers to pay cheques into their account by taking photos on their smartphones.

Rather than go to the bank in person, customers will be able to photograph the cheque, and send it electronically. The government is to launch a consultation on the idea, with a view to making the necessary legal changes, the BBC reported on Thursday.

The technology will also allow cheques to be cleared in two days, rather than the six it takes at the moment. Banks say the new transfer method will be more convenient, and more secure.

"Moving into a virtual world will actually create a more secure customer experience than the paper experience today," said Antony Jenkins, the chief executive of Barclays.

Such photos would not be stored on the phone itself, so there should be no security risk if a phone was stolen. A similar technology was introduced in the US nine years ago, following the attack on the World Trade Center. A new law known as Check 21 was passed, to enable banks to process cheques electronically, rather than having to transport paper versions across the country.

The UK government believes a change in the law would also promote the continuing use of cheques.

The UK Payments Council was originally planning to abolish all cheque payments by 2018, but was forced to change its mind after public opposition. "We want to see more innovation so that customers see the benefits of new technologies," said Sajid Javid, the financial secretary to the Treasury.

"We want cheques to have a crucial role in the ongoing success of the UK," he added.

In 2012, 10 per cent of all payments by individuals were made by cheque, and 25 per cent of payments by businesses.

The industry says most younger account-holders already use electronic systems of payment, and rarely use cheques. However all customers will still be able to pay in cheques by posting them to their bank, or by visiting their bank directly, the report said.

Barclays is planning to launch a pilot programme for paying in cheques via phone from April 2014. It hopes to launch a service for all its customers later in the year. "I think people are going into branches less and less, particularly as a result of mobile banking, and that's going to accelerate the process," Jenkins said.