ChatterBank0 min ago
Cheques
18 Answers
Please can someone tell me the process a cheque goes through when paid in to a bank account - and why does it still take so long? TIA
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There's no reason why a cheque paid into a bank couldn't be cleared electronically. Swedes complained about the length of time it took to clear cheques. The Swedish government followed up their complaints and told the banks to get their act together. If they didn't, the government threatened to take steps to make them do it. The banks took fright, and set up an electronic clearing system in a very short space of time. Now, in Sweden, it only takes up to about four hours for a cheque to be cleared and the money transferred to an account. The government in the UK looked at this some time ago, and said they'd take action. Since then - a deafening silence. Who owns the UK clearing houses? The banks themselves do! And they'd much rather make use of those millions of pounds held in limbo for their own profitable purposes than pass it on quickly.
in most cases,technically there is no reason why a cheque cannot be cleared instantly if funds are there. The problem is that by law it must be presented to the issuing bank. There is a clearing house function for this. Personally I think the whole thing is archaic and the sooner cheques ar abolished the better. There are no situation where cheques are needed anyway.
As I understood it worked when I worked for a bank a few years ago:
Day 1 with the bank it is paid in at
transferred overnight to
Day 2 clearing where it is sorted and
transferred overnight to
Day 3 the bank the cheque is drawn on. The wording is checked (that it is in date and not post dated, that there is a payees name on it, that the words and figures agree and that the cheque is signed). The drawees bank have until 12pm the following day (day 4)to say if it is not going to be paid (for one of the reasons above or because there is not enough money in the account).
Be careful though, as if you bank with a bank which is a non-clearing bank then your bank will have to pay the cheque into an account with a clearing bank thus making the process even longer.
Day 1 with the bank it is paid in at
transferred overnight to
Day 2 clearing where it is sorted and
transferred overnight to
Day 3 the bank the cheque is drawn on. The wording is checked (that it is in date and not post dated, that there is a payees name on it, that the words and figures agree and that the cheque is signed). The drawees bank have until 12pm the following day (day 4)to say if it is not going to be paid (for one of the reasons above or because there is not enough money in the account).
Be careful though, as if you bank with a bank which is a non-clearing bank then your bank will have to pay the cheque into an account with a clearing bank thus making the process even longer.
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