The UK has been in the planning stages to update and upgrade their national payments systems in an initiative called the New Payments Architecture (NPA). This includes (or initial included) their Bacs system which is equivalent to the U.S. ACH system, the now 10-year-old Faster Payments platform and the clearing system for checks, or cheques if you prefer. The complexity and enormity of this undertaking cannot be understated and may have led to the dropping of support for check clearing in the up-grade project. This may not only reduce the project scope, but also hasten the already dwindling use of checks. From a blog on Finextra:
Once again cheques in the UK are facing their demise, this time as a consequence of their being excluded from the New Payments Architecture project, or “NPA”.
This time it will be a slow and lingering death over a 10-15 year period, as investment is channeled into other services and the cheque service withers on the vine.
But worse than this is the self-awarded de-scoping: up to now NPA was meant to take over the processing of all non-card retail payments, including cheques.
Cheques would be cleared and settled through NPA without any need for exchange of the paper cheque itself, because cheques were supposed to have been de-materialised long before NPA came into existence, via the project to clear cheques as images. This is Pay.uk’s Image Clearing System project. Thus it was accepted that NPA would not clear and settle paper cheques, because the clearing and settlement would be via image anyway, but it would clear and settle the images.
Now even that has been thrown into doubt and this is serious: with all the money and resources being channeled into NPA, the exclusion of a service from the project scope is tantamount to reading the last rites over it.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
