News

July 15, 2011

Cheques will not to be scrapped as “no viable alternative” available

The Payments Council’s decision not to abolish cheques has been welcomed by business groups, as no viable alternative payment system has been proposed.

Plans had been announced by the Payments Council 18 months ago to scrap the cheque system by October 2018, but the financial trade body has since confirmed that cheques will remain in place for “as long as customers need them” and plans to establish an alternative payment method had now been abandoned.

John Walker, national chairman of the Federation of Small Businesses, called the decision a “victory for common sense”. “Scrapping the cheque would have put many small firms at a disadvantage, especially in rural areas which rely on the cheque for payments,” he said.

The Forum of Private Business (FPB) also praised the move. “The key issue for businesses was that no viable alternative to the cheque had been put forward so it just wasn’t realistic to get rid of them,” said FPB spokesman Phil McCabe.

The decision to phase out cheques had met with widespread criticism from businesses, MPs and the public – despite a 40 per cent decline in cheque use over the past five years.

According to a survey by WorldPay earlier this year, two out of five small businesses still regularly use cheques in transactions. The research also revealed that two-thirds had not set up an alternative payment system in readiness for 2018.

It is now expected that retailers – many of which stopped accepting cheques several years ago in preparation for the 2018 deadline – will have to consider reintroducing them as a valid payment method.

• Customer cheques not guaranteed from June