Bye Bye Cheque Truncation..

It is interesting to note that after a little more than a decade, Canada has decided to stop investing and creating technologies and market infrastructure for cheque imaging to make the paper clearing process faster, safer and better. North American countries in particular have been investing a lot, over the last couple of decades, on imaging programs to realize the benefits of cheque truncation.

This is because they had begun with paper based clearing systems and are trying to move over to electronic systems like RTGS which will help do away with paper based clearing. It is very interesting as some other countries like India which had the benefit of directly moving more to paperless clearing without investing much into development of cheque truncation facilities.

Late move has been a definite advantage for counties like India as their banking systems were revolutionized by rapid adoption of latest technology in tha last decade. hence they do not have the burden of sun setting obsolete systems or retiring DNP(Declining and  Non-Permitted) Technologies.

A country like India can skip a step by moving over from Paper based clearing to paperless Large-value payment systems (LVPS) like RTGS and Small Value Payment Systems(SVPS) like Electronic Clearing Services(ECS), Electronic Funds Transfer(EFT) etc, thereby doing away with the investments in setting up the infrastructure for truncation.

The way forward is electronic and online payments and the world has realized that. Over time, most counties will move away from paper instruments/cheques and the related truncation.

Hail the electronic clearing systems and goodbye to cheques.