The UK Payments Council, the trade body of the clearing banks, has decided the cheque is an anachronism in an increasingly digital age, and will be phased out by 31 October 2018.
'There are many more efficient ways of making payments than by paper in the 21st century, and the time is ripe for the economy as a whole to reap the benefits of its replacement,' said Council chief executive Paul Smee.Electronic transfer, debit and credit cards have usurped the place of the cheque. While consumers signed 10.9 million cheques every day in 1990, they wrote out 3.8 million a day last year. If the trend continues, it would be 1.6 million in 2018. It costs banks a pound to process a cheque, plus the printing and posting of chequebooks.According to the Council, the oldest cheque in Britain was signed in 1659 by Nicholas Vanacker for 400 pounds (about 42,000 pounds today). 'The cheque has existed for 350 years and holds a deep-seated place in British culture,' acknowledges the Council. 'Of course, we are extremely sensitive to this and recognise that some will have valid concerns about how this change will affect them.' To this end they are going to review the situation in 2104 and 2016 'when the final decision on closure will be taken'.There have been mixed reactions from industry organisations. The Federation of Small Business was disappointed, saying the move would cause problems for small enterprises that did not have electronic systems as well as their customers. The Forum of Private Business (FPB) says it 'is not opposed to it in principle'. But it has a caveat: the Council must make sure the move 'will drive payment innovation among the banks' and that 'viable alternatives are in place for the businesses and their customers who still use cheques'. Most importantly, it says the overall process should be market-driven, rather than done in the interests of the banks.Do you think that small businesses will reap the benefits of an electronic system, or is this simply a cost-saving measure by the banks? Drop us a line
