Clearing has a rich and fascinating history, stretching back to the 17th century and evolving into the efficient process we see today.
How Interbank clearing began
Interbank clearing first took shape in the United Kingdom during the 1600s. Back then, bank clerks had to manually sort and reconcile handwritten cheques, travelling between banks to compare and settle amounts owed. If two banks held cheques from each other, they would net out the difference and settle in cash. This repetitive process was time-consuming and inefficient.
A major breakthrough came in 1770, when a clever clerk suggested that all bank clerks meet in a single location. The Five Bells Tavern on Lombard Street, London, became the site where clerks would drop cheques into boxes for each issuing bank, calculate net balances, and settle up-often with a celebratory drink. This innovation dramatically reduced the need for gross cash payments and streamlined the entire clearing process.
Clearing spreads and modernises
The benefits of centralised clearing soon became clear, leading to the construction of the first dedicated clearinghouse in 1833. The idea quickly spread worldwide. In the United States, the New York Clearing House was established in 1853, bringing order and efficiency to cheque settlements among dozens of banks. Before this, employees from 60 banks would traverse the city to exchange cheques-a laborious and error-prone system. The clearinghouse model saved time, reduced confusion, and cut costs.
Australia adopted the model as well, with Melbourne opening a clearinghouse in 1868 and Sydney following in 1895.
The 1970s marked a new era with the computerisation of interbank clearing, vastly increasing speed and reliability. Today, the process has advanced even further, with banks offering real-time clearing and instantaneous transactions.
Clearing for all businesses
Clearitt is inspired by this long history of innovation in clearing. Our goal is to extend the benefits of efficient clearing beyond banks, making it accessible to everyday businesses. With Clearitt, businesses can save time and money, free up working capital, and support their growth-just as banks did when clearing was first introduced.
Thank you for your interest in Clearitt.