Cheque guarantee cards to be phased out

| March 31, 2010 | 0 Comments

Spanish banking giant, Santander, has announced it will begin to withdraw cheque guarantee cards for its customers.

The move comes after the UK Payments Council announced months ago that it would axe the cheque guarantee service, which has been established for forty years, from June 2011.

Santander, which owns Abbey and Alliance & Leicester, said its customers can still write cheques but all of its new debit cards will not carry the ‘guarantee’ function.

Rival banks will do the same in the coming months.

Late last year, the Council also voted to phase out cheques from October 2018.

The use of the cheque book has been in decline for many years as consumers opt for quicker payment methods.

Figures show it costs up to £1 to process a cheque - four times more than it costs to handle an electronic payment. The move will save banks hundreds of millions each year.

However, charities which represent older people have not welcomed the decision and said the scrapping of cheques could make older people vulnerable as they may hoard large amounts of cash in their home.

In addition, cheques are still used for payments to sole traders, small businesses, clubs, charities and schools.

The phasing out of cheque guarantee cards is expected to leave small businesses, which rely on cheques, exposed to fraud and financial loss.

A spokesperson for Santander said: “In light of the need to replace around five million debit cards which have a cheque guarantee logo, Santander is taking a phased approach to make this task more manageable.

“This approach should ensure that these debit cards are replaced in a measured and efficient way, so customers are not faced with a delay in replacing their card, which would be likely if this phasing did not take place.

“We are giving customers plenty of notice of this change. Customers will still be able to use cheques. It is just the cheque guarantee element which is changing,” concluded Santander.

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