Computer system and method for initiating payments based on cheques

A system and method for initiating electronic payments based on paper cheques, comprising a paying party chip-and-PIN terminal arranged to input cleartext data including cheque number and amount from a cheque issued by a first bank, at which the paying party has an account, and generate from it encoded data using a key, for the user to write on the cheque; and a computer associated with the first bank, arranged to accept, from a paid party via the internet, data defining a second bank and an account thereat associated with the paid party; accept, from the paid party, the cleartext data and the encoded data from the cheque, and to validate the cleartext data from the cheque using the encoded data and the key; and initiate an electronic funds transfer from the first bank to the second bank of the amount specified on the cheque.