Computer system and method for initiating payments based on cheques

A terminal associated with a paying party in a computerized payment system for initiating electronic payments based on paper cheques, the terminal comprising:

• an inputter operable to input cleartext data from a cheque issued by a first bank, at which the paying party has an account;
• and
• a generator operable to generate therefrom encoded data using a key,
• whereby the cleartext data from the cheque using the encoded data and the key is validated by a first bank computer system associated with the first bank before the first bank computer system arranges a transfer from the first bank to a second bank of an amount specified on the cheque.

A computerized method for initiating electronic payments based on paper cheques, comprising a computer associated with a first bank, and a telephone text messaging center, the computer:

• storing telephone numbers of telephones associated with customers;
• accepting, from a paid party, data defining a second bank and an account at the second bank associated with the paid party;
• accepting, from the paid party, cheque data from a cheque issued by the first bank and drawn by a paying party having an account with the first bank;
• sending a message via the telephone text messaging center to a telephone associated with the paying party including the cheque data;
• and, on receiving an answer message from the telephone confirming the cheque data;
• and
• initiating a transfer from the first bank to the second bank of an amount specified on the cheque.

A computer-implemented method of initiating electronic payments based on a paper cheque by:

• a payee uploading bank account details of the payee and data from the paper cheque to a computer system associated with a bank of the payer;
• the computer system associated with the bank of the payer sending a text message to a phone associated with the payer, the text message including the data from the paper cheque;
• the computer system associated with the bank of the payer awaiting a reply text message from the phone;
• and
• on receipt of a valid reply text message, causing the first bank to initiate an electronic transfer of funds to a bank of the payee.

A computerized payment system for initiating electronic payments based on paper cheques, comprising:

• an issuing bank having a first bank computer system, the first bank computer system includes a client database and an account database;
• a payee bank having a second bank computer system, the second bank computer system includes a client databases and an account database;
• a server payment computer in communication with the first bank computer system and the second bank computer system;
• a drawer card reader system including a smart card and a card reader, wherein upon writing a cheque to a paid party the paying party inserts the smart card into the card reader and proceeds through an authentication process and a response is generated by the drawer card reader system, the response being written on the cheque;
• a payee client terminal in communication with the server payment computer, wherein upon the payee internet client terminal uploading data and the response from the cheque to the server payment computer, the first bank computer system determines if the cheque is valid and causes the issuing bank to initiate an electronic transfer of funds to the payee bank if the cheque is confirmed as valid.