Plans to develop substitutes for paper cheques may be underway, but some consumers have yet to buy into technology-based propositions, say experts.

“Technology has presented the opportunity to effectively eliminate cheques, but many customers like the option of being able to write a cheque, and struggle to move away from it,” said Stephen Ley, technology assurance and advisory director at financial services giant Deloitte.

Mobile payments are seen as a key area of development, added Ley. But there are challenges, which include the cost of setting up the infrastructure and uncertainty over whether there is enough demand.

UK mobile users rank among the most reluctant to use their device to bank online, with 79 per cent of users saying they do not trust phones to provide a secure transaction, according to recent research from Unisys.

“For higher value payments, people will recognise the benefits of using systems such as Chaps and Faster Payments ­ the same-day clearing facility covering transactions made via internet and phone payments ­ as it is quicker and banks ensure that it is secure to make payments that way. The real challenge of phasing out cheques is related to their use for low-value payments,” said Ley.

Options include independent prepaid cards, whereby customers can simply load a card with money with no need for registration, which could potentially offer a payment alternative for older and those without bank accounts.

Pre-loaded, chip-equipped cards that can be topped up via connections to debit or credit accounts, such as Mastercard’s Mondex card and some Visa products, are another option.

Banks have been looking at such alternatives for a long time, mainly due to the fact that cheque processing is costly for both banks and consumers and be cause it has historically been a fraud-prone area.

But the fragmentation of existing infrastructure may hamper the effective implementation of alternatives to cheques and add to customer confusion. In its latest consultation, government body The Payments Council has stressed “the need for harmonisation of standards so that merchants can invest in new payment systems with confidence that most consumers will have compatible devices”.

The consultation also revealed that consumer groups want to ensure that these developments do not create financial exclusion, and that consumers’ interests are protected.

Convergence may be the answer, said Dave Birch, director at Consult Hyperion.

Efficient alternatives will be potentially achieved via the union of prepaid technology, which will soon grow massively in the UK, mobiles, which will be a key device in receiving and sending payments and biometrics as a tool to tackle security threats,” he said.

“Card-not-present fraud keeps going up, so there needs to be a reliable mechanism in place to ensure security. That is likely to be voice due to the synergy between voice biometrics and mobiles,” said Birch.

“If you look at those three technologies coming together in the next 10 years, the industry has a sensible timescale to provide suitable alternatives.”