Knowledge Centre
16th December 2009
Cheques are to become obsolete by the end October 2018, after a decision by the Payments Council; the body which sets the strategy for how payments are made in the UK.
However, despite asserting that a 'managed' decline with a target date will reduce confusion among users and help to stimulate the development of alternatives, the Payments Council says that it will review the situation in 2016 before making a final decision.
The Federation of Small Businesses (FSB) spoke out against the "demise of the cheque" ahead of the decision, which was widely anticipated.
Spokesman Stephen Alambritis told BBC Radio Four's Today programme that cheques allow small firms an advantage over bigger businesses that sometimes do not accept them - particularly in the case of supermarkets - and that they must remain in place to offer firms as many options as possible.
"They are a mark of trust and confidence," he added, saying that the decline should be allowed to happen "organically", rather than being hastened by intervention.
The Payment Council's strategy for the next decade - the National Payments Plan - noted "wide, but not unanimous" support for action to manage the declining popularity of cheques. However, it accepted the need to address the concerns of vulnerable users - particularly older people who do not use credit cards or online banking.
And the plan acknowledged that there are currently "significant gaps in the alternatives to cheques" - particularly for payments to mobile tradesmen and those made to or from SMEs, something which it said particularly affected micro businesses.
However, the British Retail Consortium (BRC) claims that fewer than one in 1,000 transactions in BRC member businesses were carried out by cheque.
Director-general Stephen Robertson told Today that cheques are "a very expensive way to do business".
"It's a slow method of transaction - it holds up queues; it causes a lot of extra staff training," he added.
IMAGE PA/PA Archive/Press Association Images
'Demise of cheques' will affect small firms, warns FSB
However, despite asserting that a 'managed' decline with a target date will reduce confusion among users and help to stimulate the development of alternatives, the Payments Council says that it will review the situation in 2016 before making a final decision.
The Federation of Small Businesses (FSB) spoke out against the "demise of the cheque" ahead of the decision, which was widely anticipated.
Spokesman Stephen Alambritis told BBC Radio Four's Today programme that cheques allow small firms an advantage over bigger businesses that sometimes do not accept them - particularly in the case of supermarkets - and that they must remain in place to offer firms as many options as possible.
"They are a mark of trust and confidence," he added, saying that the decline should be allowed to happen "organically", rather than being hastened by intervention.
The Payment Council's strategy for the next decade - the National Payments Plan - noted "wide, but not unanimous" support for action to manage the declining popularity of cheques. However, it accepted the need to address the concerns of vulnerable users - particularly older people who do not use credit cards or online banking.
And the plan acknowledged that there are currently "significant gaps in the alternatives to cheques" - particularly for payments to mobile tradesmen and those made to or from SMEs, something which it said particularly affected micro businesses.
However, the British Retail Consortium (BRC) claims that fewer than one in 1,000 transactions in BRC member businesses were carried out by cheque.
Director-general Stephen Robertson told Today that cheques are "a very expensive way to do business".
"It's a slow method of transaction - it holds up queues; it causes a lot of extra staff training," he added.
IMAGE PA/PA Archive/Press Association Images
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