24 July 2016
Find out more

UK's Payments Council proposes end to cheques

26 November 2007  |  9829 views  |  0 cheque

The Payments Council, an independent body established to replace the Office of Fair Trading's Payments Systems Task Force earlier this year, is mulling plans to phase out paper-based cheques in favour of a UK-wide shift to automated and card-based payments.

The proposals to eliminate cheques are part of a public consultation, launched by the Council, that will ultimately lead to the creation and adoption of a national payments plan.

Cheque volumes now comprise 13% of UK non-cash payments compared with 64% at their peak in 1990. Based on current trends cheque volumes will fall at an average of over seven per cent per year over the next ten years, says the Council, leading to transaction volumes of 840 million in 2016 when cheques will account for only one payment in 50 in the UK market.

The strongest decreases are expected in bill payment and in payments in the retailer, travel and entertainment sectors. But cheques are still widely used for person-to-person payments and payments to and from smaller businesses.

However, the Council says it will consult on whether the industry allows changes in customer behaviour and market forces to determine the rate at which cheques decline or whether there is a "proactive effort" to phase out cheques within a stated timescale.

The Council states that it is more "minded to pursue the second, more proactive option" due to the availability of automated payment options and increasing use of new technologies such as mobile and contactless payments.

"If this approach is adopted, the Payments Council envisages that in seven to ten years' time the vast majority of users will no longer require cheques, and the cheque clearing could be closed," states the consultation paper.

"Large cheque payers and recipients, including banks, insurance companies, registrars and government, would be encouraged to take the lead in moving the market from paper to electronic payments," the paper continues. "To provide focus, a target end date would be set for ending cheque use in these sectors. An education campaign would be run to support the migration."

The focus would then shift to sectors where electronic alternatives to cheques are not yet widely available, or where the uptake of alternatives is relatively low. This would include person-to-person payments, payment of subscriptions to clubs and societies and payments to small businesses.

Stats released by UK payments association Apacs earlier this year showed that the number of cheques written by people in the UK has halved from 2.0 billion to 1.0 billion in the last ten years, with volumes declining at the fastest-ever rate during 2006.

But despite the decline, Apacs' director of communications, Sandra Quinn, said that cheques would not disappear altogether and predicted that there would still be around 840 million cheques used in the UK in 2016.

Read The Payment Council's consultation document here:» Download the document now 439.6 kb (PDF File)

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Cheque volumes tumble - Apacs

Cheque volumes tumble - Apacs

31 August 2007  |  5524 views  |  0 comments
E-bill payments surpass cheques among Web-connected households

E-bill payments surpass cheques among Web-connected households

13 April 2007  |  7492 views  |  0 comments
UK task force to investigate cheque clearing times

UK task force to investigate cheque clearing times

08 November 2005  |  6044 views  |  0 comments
Cheques to become extinct in 20 years

Cheques to become extinct in 20 years

12 August 2005  |  7418 views  |  0 comments
Paper cheque processing to disappear by 2010 - Celent

Paper cheque processing to disappear by 2010 - Celent

28 October 2004  |  4094 views  |  0 comments
Electronic payments overtake cheques and cash in the US

Electronic payments overtake cheques and cash in the US

16 December 2003  |  6149 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
Find out moreVisit capgemini.comVisit www.abe-eba.eu

Top topics

Most viewed Most shared
MasterCard agrees £700m VocaLink acquisitionMasterCard agrees £700m VocaLink acqu...
8354 views 14 comments | 32 tweets | 37 linkedin
satelliteContactless Bitcoin startup Plutus Tap &am...
8045 views comments | 6 tweets | 3 linkedin
hands typing furiouslyBanking on IoT: Security in the Internet o...
8002 views 3 | 19 tweets | 7 linkedin
hands typing furiouslyWhat Every FinTech CEO Should Know About R...
7958 views 0 | 14 tweets | 8 linkedin
Santander doubles down on fintech fundSantander doubles down on fintech fund
7662 views comments | 22 tweets | 28 linkedin

Featured job

Find your next job