Chequeing Out
After 350 years of service to businesses and consumers nationwide, the UK's major banks have voted to stop clearing cheques by 2018.
The board of the Payments Council, the group responsible for setting payment strategy in the UK, decided last Wednesday to set a date of 31st October 2018 for the eradication of the now historic payment method.
"Customers aren't likely to see any immediate change as the target date is still a long way off", said Paul Smee, chief executive of the Payments Council. "This announcement marks the start of extensive work that we need to do to ensure that everyone has a viable alternative, should the cheque clearing close. We aim to be very transparent and we will continue to consult fully with all interested parties." Smee also stated that a review would take place 2 years before the proposed cut-off date to ensure 2018 remains a viable target.
To many, the news will not come as a surprise; cheque usage has been steadily declining for many years now - 25% of all non-cash transactions in 2000 were made by cheque, compared to less than 10% in 2008. Where at one time a cheque payment existed, a Bacs Direct Credit, Faster Payment or Direct Debit has taken its place. Many of the major retailers have already stopped accepting cheques, paving the way for the rest to follow suit.
While totally reliable and robust, cheques represent an extremely labour-intensive and expensive method of payment - one that has not aged well and now looks outdated when compared to modern alternatives.
With the vast majority of business and consumer payments now made electronically, and the advent of the Faster Payments Service proving a valuable and cost-effective addition to the market, the demise of the cheque will herald a new generation of efficient funds management for the financial community.
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