According to research compiled by the Association of Payment Clearing Services (APACS), the number of cheques used in payment last year dropped by 9% to 1.6 billion, the fastest fall recorded since cheque use began to decline in 1991.
A number of major high street retailers stopped accepting cheques in 2007, including Tesco(www.tesco.com) and Marks and Spencer. Gas, electricity and telecom companies give customers a discount for paying by direct debit, a stance criticised as punishing those who still prefer to use cheques.
Consumers are also choosing to pay off their credit cards ahead of spending on them. The UK’s total outstanding debt on cards took a slide from £57.4 billion in 2005 to £54.2 billion by November 2007. Christmas spending sprees saw outstanding debts rise again to the £56 billion mark though, with many shoppers failing to take heed of warnings from the Bank of England that 2008 is set to be a year of prudence.
The proportion of new borrowing being repaid remained high though, peaking at 96% in 2007.
Chris Eagle, Commercial Manager at CreditChoices, believes the death knell for cheques has been well and truly rung:
‘Cheque payments are expensive and clunky for utilities services to process, that’s why they offer such significant discounts to those who choose to pay by direct debit. The advent and rise of the debit card and cashless onetouch payments are rendering cheques obsolete. For the time being at least though, it appears that institutions such as local councils and the DVLA will continue to accept cheques for payments such as council tax and road tax.’
