/ Money

Cheque ban being reconsidered – what’s the alternative?

Woman writing cheque

The planned abolition of cheques has caused huge controversy – and 92% of you voted to keep them in our poll. Now cheques might get a reprieve, as the Treasury Select Committee reopens it’s inquiry into their future…

When the UK Payments Council announced back in 2009 that it was intending to phase out cheques by 2018, I think it’s safe to say it wasn’t expecting too much in the way of opposition to the plan.

After all, we were told, the cheque is in ‘terminal decline’ – with just 4m written in 2009, compared with the 11m that were used in 1990. Meanwhile, internet banking seemingly gets more sophisticated by the day, and there are vast swathes of people pottering about the country who have never written, nor received, a cheque.

Not everyone’s an ex-chequer

Yet ever since the Payments Council first revealed its plan, there has been a grumbling swell of protest from consumers, businesses and charities about what this might mean in practice.

Age UK has argued that pensioners may be particularly hard hit by the demise of the cheque, while companies have pointed out that the cost of processing debit and credit card payments will eat into their profits.

Which? Conversation readers came out firmly in favour of keeping the cheque when we asked for your views in November. Of the 1,311 people who took part in our poll, 50% had written a cheque in the previous month, 76% had used one within the past year and one in five of you had sent a cheque to a friend or relative as a gift.

Treasury to think twice

Now, it seems some MPs are also concerned about the UK Payment’s Council’s proposed abolition of cheques. Andrew Tyrie MP, chairman of the Treasury Select Committee, has said:

‘The Payments Council had seemingly forgotten about the millions of people who remain less at ease with the latest technology. Since our last inquiry we have been inundated by letters from the public telling us that they rely on cheques.’

Consequently, the Committee is now seeking evidence on how many people are likely to use cheques over the next few years, and what the impact of sticking to the Payments Council’s original decision might be.

What’s the alternative?

Cheques may be in decline but clearly, millions of us still use them every year, whether it’s to pay for tradesmen, for a school trip or as gifts to loved ones. So what else would we use if they disappeared?

This need for a decent alternative is our main concern, as our Chief Executive Peter Vicary-Smith says:

‘The Treasury Select Committee’s focus should be on ensuring that alternative payment methods, that all consumers are comfortable with, are in place before cheques are consigned to the scrapheap.’

So do you think the Committee is right to reconsider the demise of cheques – and if not, what alternative method of payment would you like to see in place before they disappear?

Martin Bailey says:
15 April 2011

The decision to abolish cheques was taken before the collapse of our banking system, and was based almost entirely on the idea that electronic, automated systems of transferring money are cheaper (and therefore more profitable) for the banks themselves. No proper weight was given to the convenience and indeed reassurance of the actual customers. Small traders complain that credit card companies rip them off, and that the actual mechanics of accepting cards can present problems. Cheques are simple for sending as presents, for sending as mail order payments. They are far more efficient than credit cards at giving you a proper record of expenditure.

We all know how insecure on-line financial transactions can be.

They should for once listen to their customers and keep the cheque.

Stephen R says:
15 June 2011

Cheques can also be returned unpaid, so retailers are reluctant to accept them, they can be negotiated to a third party and thus are not in any way a safe method of transmitting money and take days to clear, so the payee does not have access to the funds for that time. Taking payment by credit card means that the reatiler has cleared funds (albeit not the same day, but they know the payment won’t bounce) they give the consumer huge protection through section 75 of the Consumer Credit Act and are as safe, if not safer than cheques. As ever, people hate change and always baulk when faced with it. If we had to pay for the true cost of transmitting cheques, we would soon embrace other payment methods.


Cheques have only been accepted with a cheque guarantee card, at most outlets, for years now.
Much harder for a fraudster to use cheques and obtain a guarantee card to use with it, than it is to skim a credit/debit card and make purchases with fake card.

Taking payment by credit/debit card gives the retailer cleared funds – as does a cheque with a guarantee card number.
Banks cannot be trusted to run accounts in a suitable manner when it means more profit for them in charges. Only last week, my son’s bank reused money taken from his balance and set aside for an authorised card payment, to cover in part a direct debit.
The reason for the bank doing this (without permission) was that a non paid direct debit raised a £35 charge (unenforceable but that’s another discussion) where as an “unauthourised card payment” and “unauthourised overdraft” charges resulted in £60 worth of charges being applied.
This process is also illegal under the fraud act!

The retailer has the funds either by card or by cheque.

section 75 of the Consumer Credit Act only comes into play for sales of more than £100. Have you tried claiming money back from using a credit card in this way?
I have and its not an easy thing to do. There are a whole host of time delays, conditions, to be met, it was even suggested to me by the issuing bank, that it was upto the cardholder to prove that the advertising they had bought with their card, had not been advertised!

It’s not that people hate change I think, it is more to do with no sensible system being in place to replace it.
I’d wager good money that the banks are looking to get rid of cheques for anything that will allow them to make more money.
Many people use cheques to donate to charity or pay a bill, they also have the three day safeguard to cancel the cheque if they so wish, an option not available with cards.
I’d rather be able to cancel a cheque after a couple of days – with a simple phone call or branch visit- than spend days/weeks/months chasing up a card refund of money the company had already taken from my account.


I engaged fully in the conversation on this topic last Autumn, and I said everything I have to say on the subject in great detail there.

Briefly, though, I’ll repeat my main points again here:

1.) Cheques are cheaper than any type of card when it comes to the processing charges applied by the banks. For this reason millions of smaller businesses, one-man traders and charities will never be able to afford to accept cards (especially since banks penalise those who accept cards and then don’t conduct “enough” transactions per month). Unless the law forces banks to stop charging these profit-making fees, most especially the penalty charges, it will always be immoral to abolish the cheque. (Not that morals count for anything at all with the banks.)

2.) A very significant (minority) proportion of the population cannot get the banks to let them have accounts with debit cards, and since the banking crisis there is a welcome reduction in the number of people being given credit cards who cannot afford to have them. For these people the cheque is often the only alternative to carrying cash on their person. In the same way that pre-payment energy meters penalise the poorest by charging them more, removing the cheque from circulation will penalise the poorest again.

3.) As Age Concern and many others point out, a significant number of people, predominantly older people but also many with some degree of disability, find it confusing, difficult or simply unnerving to use cards. Why should the banks be allowed to discriminate agains these people?

4.) The PIN system implemented in the UK is vastly flawed. This was known by the banks before it was implemented. They persist in trying to tell us that PIN is more secure than signature. This is a lie. In Mainland Europe, and many other parts of the world the PIN system in use was vastly more expensive **for the banks** to implement and is similarly more expensive to run. That system IS more secure than signatures. Our system is the cheap option, to ensure that the banks make more profit. It is again immoral for the banks to be allowed to force more people to use cards, after they, the banks, have made the card system insecure.

5.) IN recent months we have seen the VISA and Mastercard systems under attack by what might be called “cyber terrorists”. Despite Visa’s hollow assurances that their system would not be vulnerable, just hours after they said this the system did crash. Visa is the system preferred by most banks over Mastercard, both for Credit and Debit cards. Neither system is immune from more similar attacks. The predominant system has failed once. If we force everyone to use cards the system will be under greater load all the time, and will be more vulnerable to attacks a) because the attackers know the chaos it will cause and b) because the system will need less of a “push” to make it crash. What do the banks expect us to to then? For anyone who was in a supermarket checkout queue when Visa crashed and saw the chaos, terror, confusion and plain anger, followed by the war-like scene of abandoned shopping trollies full of food, it doesn’t take that much to see that relying wholly on cards is inviting trouble (and that’s before we consider what happens in a humber power cut!).

The Treasury Select Committee’s announcement is most welcome and deserves cross party and overwhelming public support.

The bank show no remorse what ever for the way they crashed the economy and it is time they were reigned in. This could just be the first, very small, step towards making them take some responsibility for once.

I J T says:
16 April 2011

I don’t understand why the depositor’s bank can’t deal with cheques electronically, thus avoiding the clearance system.

Stephen R says:
15 June 2011

Er – because they need to verify the signature on the cheque!!! Also, cheques can be returned unpaid and the physical piece of paper is returned.

ISC says:
17 April 2011

Personally I don’t have a problem with cheques being phased out. Splitting the costs between everyone was fine when everyone used cheques. However fewer and fewer people use cheques these days, and I’ve not written a cheque for 18 months; I don’t particularly see why I should subsidise the costs for other users. Surely the answer is that those who want to carry on using cheques should be allowed to do so, as long as they cover the costs. That would keep the option open, but those who found them getting more expensive could then make informed purchasing decisions (as they do with most other transactions in life) about whether they wanted to stick with this method, or find an alternative.


I’m confused: ISC doesn’t see why he or she shoudl subsidise the cheque system when he or she no longer uses cheques. Fair comment though personally one I find selfish and short sighted, how