News & insights
Date: August 2015 | Client: Cheque and Credit Clearing Company | Sector: Financial services | Expertise: Regulation & competition
Economic assessment of the Future Charging Model for cheque processing
Following legislation in the Small Business Enterprise and Employment Act 2015, the C&CCC developed a plan to introduce cheque imaging to the UK, following its successful roll-out in the US. This would make cheques easier to use, shorten the clearing cycle, and remove the need for regional cheque clearing centres.
Our assessment informed C&CCC on how the building and running costs associated with the ICS could be shared between its participants whilst also meeting ‘open access’ requirements outlined by the Payment Systems Regulator (PSR). CEPA drew on economic principles of funding and charging that are relevant for payments platforms, and also examined how charging principles are applied in other network industries. CEPA then assessed the proposed charging structure for the new service based on criteria of efficiency (of build and of use) ‘fairness’ and transparency. The assessment considered the specific characteristics of the UK payments environment in making its recommendations.
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