Money News

The cheque bounces back

By Martin Fagan - news@consumerchoices.co.uk

Condemned as an arcane means of payment and set to be phased out, cheques have bounced back.

Following the public’s cries of outrage when the Payments Council announced its plans to phase cheques out by 2018, the banking industry has changed its mind and decided not to scrap the use of cheques after all.

The u-turn follows cries from charities, small businesses, the general public and MPs, who all argued that the Payments Council’s decision was impractical, taken without wider consultation and would have a huge impact on millions of Brits.

The Payments Council defended its decision, saying that although 1.1 billion cheques were issued in 2010, their use had fallen by 70% since 1990 and it anticipated a further fall of 40% over the next five years.

Following the Payments Council’s closure of the UK Domestic Cheque Guarantee Card Scheme on 30th June 2011, meaning it is no longer possible to guarantee a cheque with a card, the phasing out of cheques was seen as the next logical step.

But following the banking industry’s failure to find a “paper based” alternative to cheques, the Payments Council announced that cheques will continue for as “long as customers need them” and that it had cancelled its cheque closure programme.

"The decision to get rid of cheques was taken without having thought through the consequences for millions of people, and that was unacceptable,” said Andrew Tyrie MP, Chairman of the Parliamentary Treasury Select Committee.

“At last the Payments Council is concentrating on the right thing: making the existing cheque system faster and cheaper to operate. This will benefit both banks and customers.”

Commenting on the Payments Council’s decision, Which? chief executive, Peter Vicary-Smith said: “To announce a timetable for the abolition of cheques before any suitable alternatives had been put in place was never a good idea. This is a victory for common sense.”