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Cheque book to be phased out under controversial plans

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by Kay Mitchell
”Cheque

The use of the cheque book continues to decline as consumers opt for quicker payment methods.

Major retailers such as Tesco and Sainsbury’s no longer accept cheques, arguing that phasing out the use of cheques in stores resulted in quicker service and improved security for consumers.

Under controversial plans being devised by bankers, the cheque will gradually be phased out as banks want to switch to plastic and electronic transfers by 2018 as the latter is not only a faster method, but a cheaper one.

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.

The use of cheques also continues to decline as a result of online banking. Finland abolished the cheque book in 1993, while Sweden has also phased them out. However, they continue to be popular in France and the US.

However, cheques are also still widely used for making payments to tradesmen and for utility bills and the move by the banks has not been welcomed by the Federation of Small Businesses, who said: “We strongly oppose moves to get rid of the chequebook.”

Vera Cottrell, of the consumer group Which?, comments: “There are still no cheap, safe alternatives to cheques. Until that time, cheques should not be withdrawn.”

In response, Sandra Quinn of the Payments Council, said: “We are completely aware that elderly, disabled and disadvantaged people need alternatives to be in place. If the decision is made [to end the cheque], there will be a long time before it comes into effect.”

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News posted: November 23, 2009

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