UK banks set to vote tomorrow to phase out 300-year-old tradition of paying by cheque
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.
I hope they get Darth Vader to advertise the campaign.