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Devil's Advocate

Roger Elwell - Yes Please

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A post relating to this item from Finextra:

UK banks set to vote on abolition of cheques

23 November 2009  |  14642 views  |  3
The UK's major banks are set to vote next month on whether to stop clearing cheques as consumers increasingly turn to cards and electronic transfers.

Abolition of Cheques - I Hope the Banks Vote 'No'

23 November 2009  |  5942 views  |  6

If the banks vote to abolish cheques without first working through all the relevant scenarios where they are used today, I think they will be performing a huge disservice to the British public.  The fact that there are still 3.8 million cheques used each day means that there will be a lot of inconvenienced people should they switch them off too early.

I believe that there are a lot of person-to-person transactions that people will be uncomfortable switching to 'alternatives', mainly because those alternatives are not that appealing.  I mean things like the giving of money as a present (across a distance, say), payments for school trips, and so on.  Yes, I know these could be achieved by the recipient sharing their bank account details so the payer can send a payment using online banking, but many people are not comfortable doing that.  Similarly, we shouldn't assume everyone is either connected to online banking, or comfortable with using it, given the problems we've seen on the matter of online security (and yes, I know some people will say that a cheque isn't very secure).

This is an issue where those in command need to really think about the users, before they put £££££s first.  Over 1 billion events p.a. (currently) says there is still a demand for using this old method.

We shouldn't switch it off too soon.

TagsCardsRetail banking

Comments: (6)

A Finextra member
A Finextra member | 25 November, 2009, 10:02

I suspect the banks will take a middle ground. Progressively higher charges, starting at £5 for a new cheque book, and 50p per cheque for both payer and payee. Charges will ramp up until demand finally dies out.

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Michael Wright
Michael Wright - Striata | Secure Document Delivery - London | 25 November, 2009, 14:49

The reason that there are still so many cheques is that the fees are not yet aligned to the costs. 

As per the comment above - once the true costs of processing each cheque are charged to the drawer and the payee, then the use will drastically drop until it is only used for specific mandated transactions.

I recently had to send a cheque for £2 for a kids swimming badge. I would hazard a guess that the costs to both my bank and the recipients bank would be a huge % of that amount and hence it is a totally inefficient payment method. 

In today's financial world, inefficiencies are constantly being challenged and ruthlessly removed. Paper statements are being replaced by eStatements and paper bills by eBilling.

The cheque is not a holy cow and will eventually suffer the same fate as all inefficient processes.

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Keith Richbell
Keith Richbell - eftpos Payments Australia Ltd. (ePAL) - Sydney | 25 November, 2009, 20:58

This is little more than the usual "3 card trick" used by banks all the time.

1. Bleat on for months about how expensive something is.

2. Highlight alternative services which are much cheaper / safer / convenient.

3. Threaten to withdraw the service, listen to the protests and then responding to "customer pressure" by offering to keep the service going but charge like a wounded bull for it.

One of these days a bank will emerge that puts it customers needs before its shareholders, now that would be news!

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A Finextra member
A Finextra member | 28 November, 2009, 09:57

What is interesting about this news article are these words "UK BANKS VOTE..." A consortium voting, agreeing, on what products and services to offer...

Is it just me or does anyone else recognize this as cartel behaviour which should be prohibited? 

If bank A no longer wants to issue cheques, then it should do that on its own. Bank Z who still recognizes the need for consumers to use cheques can decide on their own to offer what their customers want.

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Bo Harald
Bo Harald - ZEF, Transmeri, Real Time Economy Program - Helsinki Region | 30 November, 2009, 13:38

Cheques were abolished in practise here in Finland in 1983 - by introducing the equivalent of 8 cents fee per form.

It is time to move forward all over the place from this slow and expensive method of payment.

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Cedric Pariente
Cedric Pariente - Racine Alpha - Paris | 30 November, 2009, 15:13

Where is the most important opinion? The opinion of CLIENTS !!!???!!!

Who cares if all the banks agree to vote "NO"?

In France, cheques are still widely used (Sorry, we are roughly 30 years behind Finland but we're doing our best).

You can pay your bills, pay a peer, delay or divide payments...

And "8 cts fee per form" is not an alternative for the french market. It would certainly be a new revenue for the bank but not a new option for the clients.

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Consulting to the financial services industry with a specific expertise in the cards business - issuing and acquiring.

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