Monday, 20 December 2010

The end of cheques

This story on the BBC News website explains the plan to bring cheques to an end by 2018. The plan was for the cheque clearing house - which manages the payments between banks - will be disbanded in that year.

I think it is a terrible idea.

Let us make one thing clear: banks hate cheques. They cost money to process. In the past they could hold onto the interest payments on the money whilst cheques cleared, but that practice has come under direct criticism recently.

Retailers also hate cheques. Cheques take time to clear, meaning the retailers do not get the money instantly, as they do with card payments.

The fact that cheques are inconvenient for both banks and retailers means that they are under direct existential threat. Earlier in the year BBC News ran a piece saying that the number of cheques being used has decreased massively. And so it has, but I disagree with their conclusion. One of the biggest reasons why the usage of cheques have decreased is that increasing numbers of retailers are refusing to accept them. Every petrol station I visit seems to have signs up saying they no longer accept cheques; some major retailers do the same.

This is a shame, as cheques are of advantage to one category of person: the consumer. I use cheques for a small number of set tasks: I pay my credit card off every month in full by sending them a cheque, and I use cheques for other tasks as well (usually for sums below the payment protection limit of my credit card), or for giving gift money to my friends, nephews and nieces (cheques being safer through the post than cash or vouchers). Cheques give the consumer an extra choice in how they pay.

I am technically literate, but I use my on-line banking as little as possible. My affairs are simple enough so that I do not need to do routine maintenance (e.g. transfers between accounts) too often. If I need to check balances on my current account then I just nip into the cashpoint when I am at the shops. For one thing I know enough to be nervous about Internet banking security.

But the situation is much worse for the elderly, people who have been using cheques all their lives and are not technically literate. As an example, I saw an elderly lady at the cashpoint inside the local Co-Op (which is, incidentally, stupidly situated by the queue for the tills where anyone can watch people using the machine). She got her cashcard out of her purse, along with a slip of paper that had her pin number on. I could even read the numbers on it, and watched her tap them in. Such a lady would be much more secure in using cheques.

The closure of the cheque clearing house would be to the disadvantage of consumers. For this reason alone cheques should be allowed to continue.

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