High Street banks are working on plans to make sure that a cheque payment which has been cleared into your account cannot later be taken back.
By Paul Lewis
BBC Radio 4's Money Box
They announced the plans after the BBC's Money Box programme revealed that banks now reserve the right to take a cheque payment back weeks, or even months, after it has been "cleared".
The banks say this happens only in exceptional cases when the original payment was fraudulent.
But small businesses and traders have said that the ability to take back money long after the payment has been cleared into an account undermines the trust in payment systems that is at the heart of banking.
Sandra Quinn of the clearing system APACS, which is owned by the banks, told Money Box on Radio 4 that these concerns were understandable.
"What customers want out of a cheque is certainty. And that is what we almost have.
"We deal with six to seven million cheques a day. Only a half per cent is ever returned unpaid; that's about 30,000 cheques a day.
"And the majority of those are returned on day four or day five. But a very tiny number are being returned much later than that, due to the rising scale of fraud."
And she announced that the banks were now trying to find a way to guarantee a payment after a set time.
"We have a project in place to look at how we can solve this problem. We're looking at how to deliver certainty by day five.
It is not known when a new system might be in place
"That's the key for this because that's what customers have tended to think they had in the past."
The Federation of Small Businesses told Money Box a solution was essential. Its spokesman Stephen Alambritis said the banks should act now.
"It really is not on for the banks to say they can never guarantee a cheque that a small business has genuinely paid in if there is a problem three or four months down the line.
"They've got the technology and they've got the profits to take the risk and to take the hit. It should be them and not small businesses."
And Nigel Ewart Evans of the Society of Licensed Conveyancers says that the present uncertainty is wholly unacceptable.
"We've accepted that five working days is a safe period to clear a cheque but that must be the limit. Once a cheque has been cleared and the funds credited to our account they must stay cleared.
"We cannot have a system where at some period, weeks or even months later, the banks can come back and say 'we know you've had this money. We know you may have spent it. But we are now looking to take it back'."
Sandra Quinn could not say when the new system might be in place.
She said the work had begun a couple of months ago but "There is no target date for completion. In six months time we should have a better idea of where we are and what we can do."
She denied that the banks were discouraging people from using cheques. But until a new system is in place, she admitted that cheques are not a safe way of transferring funds.
"The advice is don't accept a cheques from someone you don't know, particularly for high value items.
"For businesses, card accepting devices are available and thanks to chip and pin much more secure.
"For an individual, you can have an electronic payment made into your account.
"Or of course there is a CHAPS payment, although that may cost money. And if the person who is buying your car won't split that with you, you'd be justified in wondering why."
BBC Radio 4's Money Box was broadcast on Saturday, 9 October, 2004 at 1204 BST.
The programme was repeated on Sunday, 10 October, at 2102 BST.