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U.K. to Get Rid of Check Writing by 2018

December 22nd, 2009 · 3 Comments · Banking

by Kristy Welsh

(Last Updated On: December 18, 2009)

Are checks (in British spelling, cheques) going the way of the horse and buggy? On December 16, 2009, the 350th birthday of the check, the Payments Council Board of the United Kingdom agreed to set a target date of October 31, 2018 to close the Central Cheque Clearing.

The Payments Council is the organization that sets strategy for UK payments. It was been established to ensure that UK payment systems and services meet the need of users, payment service providers and the wider economy.

So why the phase out? Many people are already using alternatives to the check: PayPal, debit and credit cards, online bill paying and payment by phone, to name a few. As technology for electronic payments continues to improve, the Council had to decide whether or not to continue to support an antiquated system in dramatic decline:

  • In 2007-2008, the vast majority of major U.K. retailers stopped accepting checks.
  • In 2009, just under four million checks are written each day in the U.K., compared to 14.8 million debit card payments.
  • Although check use has been in decline since 1990 and has fallen by 40% over the last five years.

In making the decision to close the Cheque Clearing System, the Council faces the challenge of how to best ease people into new payment systems. There are still plenty of situations where checks are used extensively:

  • payments between individuals
  • payments to sole traders
  • payments to small businesses, clubs, charities and schools

The Payments Council wants to ensure that consumers and businesses are not left high and dry when the closure of the clearing occurs, prevent confusion and deliver check alternatives that are acceptable to check users. The 2018 date was thought to allow plenty of time for people to transition to the new payment styles, and ensure there is no scenario where customers, individuals or businesses, still need to use a check.

Opponents are worried that the elderly and the “vulnerable” will be left in the cold. In addition, they are worried that banks will start charging for alternative payment systems. (Ridiculous, because it’s cheaper to process electronic payments than checks.) The payments industry has been charged with finding easy-to-use efficient payment alternatives and to ensure they are easily accessible and well understood by current users of checks.

Could this happen in the U.S.? I don’t see why not. Though I still use checks for business, it would be nice to be able to get rid of those things, if not for easier record keeping then avoiding the drive to the ATM to deposit them.

What do you think – would you like to eliminate checks from the banking system? Leave a comment and tell us what you think!

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3 Comments so far ↓

  • Anon

    Why get rid of cheques? Why not add a fee to the processing of each cheque to run/maintain the clearing system? People would then move to non-cheque payment services if they didn’t like the cost or would continue to use cheques where their benefits outweighs the transaction charge. This is another case of a handful of bureaucrats making decisions which could easily be made by the market.

  • nigratruo

    Ouch! Having to use checks, depositing them, paying with them has been the biggest annoyance since I came to the US. In Switzerland, where I am from, nobody and I mean NOBODY is using checks anymore and why would they? It is such a backward and silly way to do payments. The problems are endless, checks can get lost in the mails, they can bounce, they take time to travel.
    In the 21st century, you have one banking computer interface with another and transfer the funds, problem solved. Costs nothing, for the 40 bytes to move from one database to another.
    There is no such event EVER where money cannot be transfered, because funds are checked as it is moved over.
    And online banking here in the US is not really online at all, get this!!! they STILL send out checks in paper when you do a payment. This is so silly it makes me laugh. How much do payments bank account to bank account cost in Switzerland? Nothing of course. You cannot charge any money for something that is effortless and requires no work at all.

    Is it dangerous to give somebody your bank account number? No, not in the least. Proper banks have security in place where only the rightful owner can access funds. In the US, there is this shocking quasi security, where you use your SSN for every transaction on the sun, as an indentifying proof and it is so easy to get somebodies SSN, and use it to impersonate that person, it is not even funny.

    Seems like in America, most people still have their money in socks or in the mattress, otherwise it would have occurred to somebody that SINCE EVERYBODY HAS A BANK ACCOUNT BY NOW, bank transfers is the only way to go.

    And now the magical trick, for all people that are used to checks and have never seen the high tech way that payments have been done in Switzerland for 2 decades now:
    What if you owe money to a company? To the government or some institution? To pay bills?
    You use e-banking. Enter the account number of the company, enter the amount, push pay and bang, it is done. No cost, no delay, the payment is on the companies account the next day.

    Incredibly high tech, isn’t it? Well, to me the US seems like a banana republic when it comes to the ancient payment system it has.Not on par with other western countries. Totally annoying!

  • nigratruo

    I am by the way amazed that the UK has not phased them out by now. I remember hearing about checks and the theory in commercial school. It was more like a history lesson. Nobody that is younger than 35 years has ever seen a check, much less used one. You use debit cards, because they never carry a charge, use credit cards, use cash and if you need to pay somebody, person or company, get their account number and transfer the money over. Simple and efficient.
    I’m pretty sure that if I would fill out a check in Switzerland now and go try to pay something with it, they would not accept it and look at me oddly. 😉 I think they phased them out probably in the 90ies.

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