Banks earning on slow cashing cheques

15.07.2005 The government-sponsored task force, led by the Office of Fair Trading, has put pressure on banks to speed up the time required to clear cheques and other forms of electronic payment. At present it takes a minimum of three days for cheques to clear, and two or more days for electronic forms of payment.

The government-sponsored task force, led by the Office of Fair Trading, has put pressure on banks to speed up the time required to clear cheques and other forms of electronic payment. At present it takes a minimum of three days for cheques to clear, and two or more days for electronic forms of payment. Consumer groups such as "Which?" Magazine have commented that banks make profits on the long clearing period. "Which?" estimates that banks make around ₤30m a year on the interest earned during the days when payments are clearing. Banks have agreed to speed up the time taken for electronic payments, but it could take as long as two years, before the IT systems for cheque clearing will be in place. The reluctance of banks to speed up the implementation period  may be because of the declining usage of cheques. According to APACS, the use of cheques has been gradually decreasing, with the average adult receiving just seven a year. However they remain a popular form of payment in the business sector for paying suppliers. When the new system is in place, it is believed that a cheque paid in the morning should be cleared by the end of the day.