Virtual cheques will foil the fib

By CHRIS DANIELS consumer reporter

"The cheque's in the mail" is one line. Then there's the old "Bounced? Never! Just take it back to the bank. The money's there ... I promise."

Such tall stories, part of banking culture for many years, are now becoming harder to tell with a straight face.

The forces of technology and banking have come together to speed cheque clearances.

Unfortunately, the first result will be that dud cheques bounce a day quicker, while good ones won't clear any earlier - yet.

The millions of cheques sent between banks will soon all be electronically scanned, then stored in a database, ready to be sent to the banks each morning.

Because not all banks are taking part in the scheme, there has been no reduction in the length of time it takes for a cheque to clear after banking - it can still take up to five days to get your money.

The director of Massey University's Centre of Banking Studies, David Tripe, said that by moving to electronically capture cheque images, banks were able to "slow the increase" in the costs of processing cheques.

It would also become increasingly difficult for banks to justify long delays in clearing cheques.

A law change five years ago allowed banks to use certified electronic images of cheques, rather than the cheques themselves.

Before a bank could make the "pay or dishonour" decision, it previously had to see the actual cheque, which meant waiting an extra day while it was sent from one of the cheque processing centres.

Now the bank is sent an electronic copy of the cheque, to check a day earlier than before.

At present, cheques are kept for several days after scanning, but they will soon be destroyed immediately after being read. Digital copies will be kept on a database for seven years, removing the need for large warehouses filled with archived cheques.

The National Bank and BNZ are now fully involved in the new electronic system, while the ANZ will join this month. The ASB hopes to join early next year.

WestpacTrust uses electronic imaging itself, but is not part of the latest cooperative scheme.

The National Bank has published a brochure telling customers they will now be told a day earlier if a deposited cheque has bounced. This applies only to National Bank cheques, but it will soon include other banks' cheques.

The actual cheque will not be sent to the customer. Instead, they will get a printed image. They will not have to go to a branch to re-present the cheque, but ring a toll-free number and quote a reference number.

Publicity about the new system contains a warning to customers: "You will need to ensure you have sufficient funds in your account when you write out your cheque, because the decision to honour or dishonour your cheque will be made one day earlier."