The UK's Payments Council has delivered its first national payments plan which includes proposals for the "managed decline" of paper-based cheques and the development of a collaborative "bank account to bank account mobile payment service".
The Payments Council is an independent body established in March 2007 to replace the Office of Fair Trading's Payments Systems Task Force. The Council says its first national payments plan - which follows a public consultation - provides a "strategic framework for payments innovation and change over the next decade".
The Council says the demise of the cheque was subject that attracted the most comment from respondents during the consultation.
"Our diagnosis that use of the cheque is in irreversible decline went almost unchallenged," says Brian Pomeroy, chairman of the Payments Council board. "Our proposal that a managed decline was preferable to an unruly exit was also widely supported."
But Pomeroy says there were concerns about the setting of an "end date" for cheque clearing, even a date "some ten years distant". During the public consultation the Council had suggested that cheques be phased out by 2018, but this was dropped in the final plan.
The decline of cheque use in the UK has been widely documented. Earlier this year UK payments association Apacs said cheque volumes declined at a record rate in 2007 as customers use plastic debit cards to make payments instead.
Around 1.6 billion cheque-based payments were made in 2007, a decline of 9.3% from 2006, whilst total value of cheque payments fell 1.3%. This is thought to be the fastest rate of decline recorded since cheque use began falling in 1991.
Over the past year more retailers in the UK have stopped accepting cheques for payments. Supermarkets Sainsbury's, Morrisons, Asda and Tesco along with retailers Boots and Marks and Spencer, are either phasing out or have already stopped taking cheques. Shell has also stopped accepting cheques at its petrol stations across the country.
The Council says it will work, "with a sense of urgency", toward managing the decline and eventual elimination of cheques from the payment landscape.
"We are confident that substantial economic benefits will flow from a programme of activity to manage down the volume of cheques," says the report. But the Council says that cheque clearing "will only be closed once acceptable alternatives to cheques have been developed".
The Council says its consultation found that mobile payments are viewed by respondents as an important innovation, with potential to help in a number of areas, including financial inclusion and the move away from cheques.
In light of this, it will investigate the potential to develop a collaborative bank account to bank account mobile payment service and will decide by June 2008 whether to proceed with developing the service.
Other priority areas for the Council include improvements to the direct debit system, standardisation of account number formats, standards, financial inclusion and supply chain automation.
Read the Payment Council's National Payments Plan here:
Download the document now 666.9 kb (PDF File)