Article
Cheques to be bounced into history
UK banks set to vote tomorrow to phase out 300-year-old tradition of paying by cheque
On the blog: What happens when cheques check out?
Cheques cost as much as £1 each to process. Photograph: Getty
Do you pay the milkman by cheque? Slip a surprise cheque in a Christmas card to a grandson or granddaughter? Or maybe you simply don't trust direct debits when dealing with gas and electricity companies?
In the future you'll have no choice but to pay electronically, by plastic, or go online if, as expected, Britain's banks vote tomorrow to phase out the tradition dating back more than 300 years of payment by cheque.
Cheques cost up to £1 each to process – and the number written has been falling steadily. As recently as 2002 a typical consumer in Britain was writing 31 cheques a year, but the number fell to 14 by 2008. Big stores such as Marks & Spencer have already stopped taking cheques, and the Payments Council, which sets strategy for UK payments in Britain, says they are now used for fewer than one in 25 purchases.
Scandinavian countries and Ireland have already voted to phase out cheques, and a board meeting of the Payments Council tomorrow afternoon expected to set an "end date" of 2018 for cheque clearing in Britain.
It wants consumers to switch to cheaper and faster electronic payment processing and says it will use the eight-year transitional period to ensure alternative arrangements are put in place.
"Mapping out how the UK might move to a society where, by 2018, there is no need to use a cheque for any type of payment is no small task," said council spokeswoman Sandra Quinn. "Even if the board decides to set a target date, we are clear that we would need to continue to engage with as many other bodies as possible to understand their concerns and requirements. The demise of the cheque in 2018 is only feasible if interim targets are set and met and it can be demonstrated that no one will lose out."
But the phasing out of cheques has led to intense concern among groups representing senior citizens. Many elderly bank customers are unhappy about online banking, or have sight difficulties and prefer the comfort of using cheques.
Neil Duncan-Jordan, of the National Pensioners Convention, said: "Using a cheque to settle your financial affairs is extremely important to older pensioners who might struggle in later life with the use of chip and pin. This option is effectively removing choice from a whole section of the population. The representatives of the Payments Council are completely out of touch with the needs of older consumers and need to think again."
Age Concern and Help the Aged say that 6.4 million over-65s have never used the internet, and the loss of cheques will force older people to keep large amounts of cash at home, leaving them vulnerable to theft and fraud.
Andrew Harrop, head of public policy at the charities, said: "Many older people rely on cheques as their main form of payment and will be very worried about how they will manage if they are withdrawn.
"Our fear is that setting a date will give the green light to banks and retailers to withdraw cheques even earlier than 2018, as some already have. It is vital that before cheques are phased out, the Payments Council ensures there is a practical, safe, paper-based alternative in place which serves the needs of this group."
Small businesses point out that, despite the decline, there are still 1.4bn cheques written every year by individuals and businesses to pay bills, traders or family members.
Stephen Alambritis, of the Federation of Small Businesses, said: "This sends completely the wrong message to the self-employed, small businesses and people who run small clubs and charities.
"We are opposed to the Payments Council dictating this, at the behest of the big banks, when cheques are still hugely popular as a method of payment. We know that students and young adults are using the chequebook less and less, and the banks talk about things such as cheque fraud. But it is terribly wrong to set any date as to when they can no longer be used. They are also an important record of transactions for small businesses."
But Quinn said that most under-30s now barely use cheques, while the under-20s have barely heard of them.
She added: "So far, no group consulted has said 2018 is not feasible although all parties recognise that it would be a major challenge to get right and that currently sufficient and accessible alternatives to cheques do not exist for a number of individuals and users."
The Payments Council board is made up of 16 directors, 12 from the banks and four independents. The independent directors enjoy a power of veto, but are not expected to impose it tomorrow.
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User Comments
betafuture
15 December 2009 5:54PM
Direct debt is fine for those on a regular salary but not for those running small businesses who need to closely manage their accounts.
Bauhaus
15 December 2009 5:55PM
Pay cash everytime, dont let the buggers profile you by your spending.
rootsfi
15 December 2009 5:55PM
we should only get rid of them if a better alternative than cash is found. til them, they're useful to a lot of people. besides, what's the hurry? they're being naturally phased out of use anyway.
Erdington
15 December 2009 5:56PM
If the banks want it then I am against it.
If you do not have a computer connected to the internet, how will you make payments for say your electricity bill? Oh yes it will automatically be deducted from your bank account, but if the bill is incorrect, just imagine the gargantuan task of refuting it. When you phone to complain you will have to endure a ring a roses with a computer generated voice. Press one to go back to the beginning. If you are lucky you will be able to talk to a "live" representative in India after you have been kept on hold for thirty minutes.
Hebblethwaite
15 December 2009 5:57PM
As far as I'm concerned, it's a retrograde step. Cheques are one of the securest ways of posting money - plus, it's always pleasant to receive a cheque in a birthday card.
optimist99
15 December 2009 5:57PM
Cheques are a nonsense. Virtually unknown in Germany where payments are commonly made by a Bank Transfer (Überweisung) - you send instructions to your Bank either by a standardised paper form or by Internet banking.
You can credit another Euro account anywhere within the EU at no extra cost too...
Erdington
15 December 2009 5:57PM
benhaus
I use cash whenever possible so that the banks cannot charge my supplier the 3% fee on the transaction.
Salmonslice
15 December 2009 5:58PM
Loads of students use cheques. How else do you pay for membership of student societies and so on, or your housing bills / landlord, and so on? I know plenty of international students who are not permitted to have a chequebook by the banks and many of them have real trouble paying for various things at university -- often resorting to paying British friends in cash in exchange for a cheque!
Ruralidiocy
15 December 2009 5:59PM
Does this include blank cheques written by the taxpayer to the banks?
whatwedoissecret
15 December 2009 6:01PM
The most obvious question that doesn't seem to be sufficienty answered is why bother doing this in the first place? The only reason I can find in the article is that it costs the banks a bit more to process them. So it's just a money saving for the banks then.
COmeon payments council, don't be so slavish. So what if under 20s have never heard of a cheque, the people that do use them want to keep them around, its those people's voices that ought to count the most.
CaptSensible
15 December 2009 6:02PM
Agree with betafuture above, Direct Debit is useless for anyone with a freelance income who needs to phase and stagger their payment schedules.
Also, in an age of increasing fraud, why should we be forced into giving bank details to companies and organisations online when we have no evidence of their security provisions.
Please keep cheques as a payment choice, they're essential for some of us!
CaptSensible
15 December 2009 6:05PM
Most under 20's have never heard of the vote either, doesn't mean we should get rid of it...
dalstonrosi
15 December 2009 6:07PM
I find cheques really useful for certain things. Would be a shame to see them go. And I'm under 30 so definitely speaking for the 'young generation' here.
decisivemoment
15 December 2009 6:10PM
I'm curious as to how people are going to pay rent. Or get gifts from their relatives, especially those that aren't online.
Optymystic
15 December 2009 6:15PM
Or 'checks' as they are now known in the Guardian, which will now miss another opportunity to pander to its expanding American readership. I am looking forward to Chancellor of the Exchecker though.
orangebeat
15 December 2009 6:22PM
I am a theatre freelancer and I hate it when people pay me by cheque. Often I'm not at home to receive them in the first place, and then I've got to find time to get to a bank to pay it in, and then I've got to wait for it to clear. I've been paying my own freelancers by bank transfer for years. I'll be glad to see the back of cheques.
ilex
15 December 2009 6:28PM
There really is no end to the crap we get from the banks, is there? I am an old person. I manage credit cards, internet transfer, debit cards, you name it, despite being over 60 and therefore doddery. Cheques have some important uses and should stay.
shutyourcakehole
15 December 2009 5:52PM
Will the banks then also begin clearing funds instantly instead of telling you it will be 4-5 working days (or 7 if its the Halifax) or continue to benefit from using it for free between the moment they deduct it from your account and it appears elsewhere?