Having seen the recent press headlines on delays in cheque imaging, I began to think about the role that cheques play in the
UK payments market. Cheques have caused their fair share of controversy over the years. The failure in
2011 to manage the decline of cheques is often cited as one of the reasons for the removal of the UK Payments Council, and introduction of the UK Payment
Services Regulator. We spend much of our lives in the payments business thinking about the future of payments. A future where payments are increasingly invisible and instant. A future that is likely to be dominated by real-time transfers and single
tap payments. Is there really still a place in our digital economy for the traditional cheque?
A question often asked at conferences is: When did you last write a cheque? Personally, I struggle to to remember where we actually keep the cheque books in our family home. The last cheque I received is still in my wallet, some 4 month having received
it from an ageing family member. Cheques are not a relevant part of my day to day life.
However testing frequency of use is only one way of looking at the utility of a payments product. What if we were to ask: If you had to pay a builder £200 and your banking app was not working, how would you do it? Many of us know from direct personal experience
that banks' networks are not always available when needed. Until now this has typically been caused by internal mis-adventure, but what would happen if there were a co-ordinated terrorist event which derailed our digital payments infrastructure for a longer
period? Would we look at the humble cheque in the same light when trying pay for dinner if it is the only way to pay?
I know as much as anyone who has worked in the payments industry for the past 15 years that the chances of the POS and ATM network collapsing at the same moment are vanishingly small. However no-one is infallible, and there is always a danger of hubris.
As we rapidly move payment processing into the cloud and we become increasingly reliant on our digital wallets being available 24/7, there are always benefits in having a paper back-up.
Many European countries (such as Germany or Sweden) have radically reduced their consumer cheque usage (see diagram). We still have ours, so what value do they still deliver? It is the consumer equivalent of the zip-zap machines which some merchants still
have in their store cabinets. Pretty much everyone in the UK still has a cheque book somewhere. Most businesses still know how to accept them, and consider them as valid forms of tender (although this is declining all the time). They are useful for both high
and low value transactions, and can be used by both old and young.
Although there have been significant declines in use, there are still plenty of cheques circulating in the UK. According to the European Central Bank each UK adult made 12 cheque payments in 2014. Many schools still rely on them, as do piano teachers everywhere,
and membership organistions of all types find them significantly easier to track and process than credit transfers. The un-managed decline of cheque is worrisome as many of the benefits of ubiquity will gradually be eroded, irreparably damaging the utility
of this important back-up tool. If cheque imaging helps keep this paper back-up around for a bit longer, so much the better.
I would not miss cheques if they disappeared tomorrow. However, they still provide a back-up in exceptional circumstances that we should not dismiss out of hand. We have not yet seen any attacks on our payments infrastructure, but this is just a matter of
time. When that happens I will derive a bit of comfort that I still have a cheque book. It may just take me a little while to find it...