I’ve had internet banking for the majority of my adult life, but I still write and receive a surprising number of cheques. I may not be able to use them to buy petrol, but they pay for the kids’ school dinners and activities, cover the milk bill, pay tradesmen and allow relatives to safely send financial gifts in a way that “I’ve transferred £30 to your bank account” just doesn’t match.
As a nation, we write nearly four million cheques every day. They might be expensive and annoying for the banks to deal with, but they’re still useful for us, and the alternatives are a long way from being up to scratch.
But eleven days from today, on 16th December, our banks are planning to vote to abolish cheques altogether, the aim being to phase them out by 2018.
The problem with this money-saving-for-the-banks measure is that they don’t actually have an alternative .
Small businesses would presumably be forced to install card processing machines, increasing their costs (so the banks effecively just pass the cost onto others).
As for how grandma gives little Jenny her birthday money without sending notes through the post, who knows?
Mark Hunter, Lib Dem MP for Cheadle in Stockport, has launched a campaign to save the cheque. His Early Day Motion has so far been signed by 69 MPs from all the main parties and has gained the support of Which? and the Federation of Small Businesses.
Hunter has created a petition on the Number 10 site:
We the undersigned petition the Prime Minister to save the cheque by reminding the banks of their duty to serve the customer – and not vice versa – and by asking members of the Payments Council to vote against abolishing the cheque bearing in mind the great inconvenience such a decision would cause to Britain’s most vulnerable people
If you support the campaign, sign the petition: the clock’s ticking.
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15 Comments
From a green point of view, cheques are a pain. They cost trees to produce and petrol to transport. If I want to pay one into my bank I have to drive to Huddersfield, whereas cash I can pay in at any post office.
I understand that there is always a tendency within the English to cling on to the remains of an outdated past, but surely this sort of conservatism doesn’t sit well with Lib Demmery?
I don’t think anyone would have a problem with cheques being phased out if there was an alternative that did the job. I’m sure no-one would object to a more streamlined approach to dealing with cheques either – logistically, there’s no reason at all to physically transport them around the country rather than, say, scanning them in.
But just scrapping them isn’t green, it’s simply about boosting the banks’ profits at the expense of small businesses and ordinary punters, especially the elderly.
“If I want to pay one into my bank I have to drive to Huddersfield”
I post cheques to my bank – no problem.
“I understand that there is always a tendency within the English to cling on to the remains of an outdated past”
I’m quite prepared to accept the steady decline in the use of the cheque but it isn’t outdated until the banks come up with a suitable means for all of the elderly and/or disabled who don’t or cannot use internet banking etc to be able manage their finances to their own satisfaction.
It would surely save the banks some money if they’d stop sending new chequebooks to people who never use them. I haven’t written a cheque since the mid 90s yet HSBC and RBS both regularly send me new books full of ’em. I have a big stack of them somewhere, all untouched.
How will the absence of cheques work for society accounts. Electronic banking and payment cards ahve obvious practical problems when you need two signatories on a cheque.
The Payment Council’s detailed research into barriers to phasing out cheque does take account of the problems facing the elderly and homebound and is worth a read.
http://www.paymentscouncil.org.uk/files/payments_files/payments_council_cheque_use_research_2008.pdf
It should be noted though that similar arguments this anti-campaign were also used when…
– they decimalised the currency
– counter services were reduced with the widespread adoption of holes in the wall
– they proposed paying pensions directly into accounts
– mechanised looms made cottage textiles redundant
At some point technological progress means the old way of doing things, other than as specialist or niche services, becomes unviable. That can be uncomfortable, but it rarely merits government intervention. That the campaign focuses on imploring the Payments Council to defend the status quo on behalf of ‘traditionalists’ rather than reaching for the statute book, at least makes it inoffensive and harmless populism.
Back in the real world though, if there really remains great customer demand for cheques there is a then clearly a niche for enterprising banks or the Post Office to provide that service. I could be wrong but doesn’t the Payment Council decision simply mean beyond 2018 members do not have to honour or provide cheques. It doesn’t mean they can’t make their own arrangements to provide them. Whether retailers will accept them though is a moot point, the report makes it clear many already do not and that ultimately will kill the cheque.
What’s missing from Mark’s campaign I feel is the other half of the report which talks about the need for a campaign to promote the alternatives to cheques, particularly amongst vulnerable groups. Personally I’d love to know how to replace a clubs and societies dual authority account with something electronic… the report makes it clear that is already possible… more of that please.
The paper you link to is interesting and does seem to back up the campaign: it admits that problems exist for which there are currently no solutions if cheques are abolished. The view seems to be that, once the decision to abolish cheques is made, solutions will be found.
Perhaps so. Perhaps we should trust the banks to have the best interests of all their customers (not just the majority) at heart and put that before their own convenience or profits. I have to say I’m not convinced, and I don’t buy the argument that if abolishing cheques is OK for the majority, it’s OK for everyone.
Whilst, for me, writing a cheque is far more convenient in many cases that making an Internet money transfer, I at least can do it either way. As the report freely admits, there’s a significant minority who can’t.
Andy – you also liken the campaign to save cheques to campaigns to retain pre-decimalised currency etc.
I disagree – there’s a big difference. The proposal isn’t to have something new that benefits people more, even on balance. It’s to remove something, plain and simple.
Someone might never use cheques and be entirely happy with internet banking, PayPal, credit and debit cards. Good for them. Removing cheques makes little or no difference to them at all, certainly no more than streamlining the cheque service would. For them, scrapping cheques is no big deal. Why not do it and move to the brave new paperless future.
But, of course, that’s not the point. The issue is the minority of people who are having a service removed – with nothing yet in its place – because the banks want to cut costs and see this as easier than reforming the cheque-handling system to make it easier, cheaper and greener.
I think you need to consider this phrase in the National Payments Plan
http://www.paymentscouncil.org.uk/files/payments_files/final_progress_update.pdf
“Even if a date for closing the cheque clearing is set at the end of this year, the closure will not go ahead until alternatives are in place and there is evidence that users – including those groups identified as highly dependent on cheques – have accepted them.”
And if the date is actually 2018, that’s quite some time to meet that objective… and seems to be coupled with the protection that if, even by then, alternatives are not ready, cheques clearing will not end… which rather begs the question what additional safeguards is the campaign asking for?
Andy – I’m glad you have such faith in the banks to act in the interests of the minority of their customers who might face problems; I just question whether that faith is well-founded, especially given recent events. Who decides whether alternatives are ready? That would be the banks, I guess – the same people who stand to make lots of money by deciding that they are.
Very unusually, I find myself onside with this one. Normally can’t stand our disgusted-of-Dorking campaigns. But this is a cartel enforcing a choice. If one bank tried it, I daresay they’d instantly lose all their elderly customers and a good proportion of the rest and quickly realise that it’s too soon to phase out cheques. So to avoid that minor feedback issue, they’re all doing it at once, which is clearly contrary to liberalism.
Iainm – I know, why the hell do they do that? Recently I rang up to query a cheque that had been cashed on my account, because, as I told them, I haven’t written a cheque for about five years and I’ve disposed of a heap of unused chequebooks over that time. The investigation turned out fine (it really was a cheque from five years ago!) but after it was done they sent me another new bloody chequebook.
There’s a Payment Council? With a National Payment Plan?
Crikey – time-warp! That Nice Mr Herbert Morrison will be along in a minute to tell us all what’s good for us…
I don’t know how charities and local organisations could operate without cheques. Membership is best paid by Direct Debit or Standing Order, but a significant minority won’t commit to that as they want to decide annually whether they still support the organisation. But even if that were solved, what about fund-raising events through the year?
For example, we’ve recently been collecting in money for our Christmas Draw – mostly cheques for £5 or £10 coming back from supporters by post. How else would they pay us? People are told not to put cash in the post, we wouldn’t want to give out our bank details to everyone, and while some would use Paypal, many would not – and Paypal would charge a fee on each transaction.
Looking at my own cheque book, almost all the cheques I still use are payments to Liberal Democrat events or groups, plus occasional cheques to local charities and small traders. Everything else I can and do pay online or by credit card.
And no this campaign is not Luddite. Bring on metric measurements and the Euro, say I, and as for using the net, I’ve been online in some form since 1982, but let us keep our cheques for when they’re needed.
Alix: “So to avoid that minor feedback issue, they’re all doing it at once, which is clearly contrary to liberalism.”
Cheque clearing, or rather ‘free’ cheque clearing is only possible given a collective voluntary agreement by the banks to handle each other’s cheques without charging the handling cost. That is what is proposed to be withdrawn. A voluntary association is proposing to end a voluntary agreement, you can’t surely believe that is illiberal?
Cheques would probably still be around, but there would be a charge for their use… or maybe not given frequent threats over many years to introduce handling charges on cashpoint withdrawals have come to nothing given precisely the problem you note over customer defections.
The other side of the liberal coin on this though is whether or not this service can be classed as an ‘essential public service’, a vital piece of financial infrastructure.
I’m not sure, it depends whether effective withdrawal or charging for cheques stops some important activities or seriously damages quality of life for some people. If that can be shown a case could be made for insisting the banks keep the service as a form of social tariff or statutory duty. I suspect the service will be withdrawn when that cannot be shown in a convincing way with other options reasonably available to everyone.
If the issue on the other hand is marginal convenience and preference that is not such a good basis for intervention, and the banks might reasonably ask the government to pay for the service if they want it provided, rather like the remaining street phone boxes.
Iain your point follows from that, I have faith banks will act like businesses within the rules set for them. If the bank decides alternatives are viable and the government of the day or opposition disagree you will either have to lobby to change the rules at that time or make the service viable through subsidy.
David, it’s a fair point, but not a compelling reason I think for forcing banks to retain a service they no longer wish to provide. In respect of fundraising events, IOUs are often used already as few people carry around a cheque book. They’re clearly not as convenient but are I think just as legally binding.
Well, I can guarantee that solutions will not be found if the presence of cheques is mandatory.
I will support any effort to require new solutions to be in place before cheques are phased out – that’s a perfectly reasonable thing to ask, and a fairly minor amendment to what they’re currently voting on. I will oppose any effort to require cheques to be retained, because this would prevent any progress from being made.