The amount of time it takes for cheques to clear could possibly be shortened following a declaration that the Office of Fair Trading
(OFT) will investigate to find out the demand for cutting the three-day process.
The probe will involve banks, building societies, consumer group and trade groups with the aim to determine whether there is a clamor and significant benefits for businesses and individuals if the cheque clearance time is hastened.
Although paper-based payments has been steadily declining in recent years, cheque payments still remain a popular mode of payment by and from small businesses for the transaction of goods and services.
The UK payments association APACS has confirmed the lowered cheque volumes because of the increased use of plastic cards, direct debits and e-payments. But the association also said that cheques still remain popular among the enterprise sector for paying suppliers. Consumers also still use their cheque books to pay for one in six regular bills.
All over Europe, the growing acceptance of debit cards followed by credit cards has further decreased the market share of cheque payments. The drop has been most notable in Germany where only one per cent of the population prefer cashless payments.
France and the UK have remained dominant issuers but both countries have been suffering from marked declines. The Netherlands, Spain and Portugal are also experiencing a slump in paper payments.