Writing on the wall for cheques

The saying has become a modern-day joke – "the cheque's in the mail".

Spoken with a broad smile nowadays, the phrase means payment will come ... one day. Soonish. Maybe.

There was a time, however, when the phrase was uttered with a straight face.

But those days are long gone, and soon, so will be the cheque itself.

A British banking organisation has today announced that it plans to completely phase out cheques by the year 2018.

The UK's Payments Council said the move, which will save the banking industry there £600m a year, was necessary after a steep decline in usage since its peak of 10 million cheques a day in 1990.

A succession of retailers, including all nationwide supermarket chains and most petrol stations and high-street stores, have stopped accepting cheques because of their high processing cost compared with debit cards.

Cheques cost around £1 per transaction to produce and process, compared with less than half that amount for the 15 million daily debit card payments. Cheques are now used in just three per cent of retail transactions but cost £1.4bn a year to process. By 2018, the annual cost will have fallen to about £580m.

The Payments Council, which is funded by the banking industry and organisations responsible for money transfer systems, made the announcement to ensure that a viable replacement is introduced. The decision will be reviewed in 2016 before a final go-ahead is given to shut down the cheque clearing system.

Paul Smee, the council's chief executive, said: "There are many more efficient ways of making payments than by paper in the 21st century, and the time is ripe for the economy as a whole to reap the benefits of its replacement."

But the announcement of a compulsory end to the use of cheques has unnerved groups that remain reliant on their use. The elderly are the heaviest users of cheques and, whereas the average 25-year-old receives two cheques a year, those over 65 get four. More than half of adults, 54 per cent, still write cheques.

Andrew Harrop, head of public policy for Age Concern and Help the Aged, said: "Many older people rely on cheques as their main form of payment and will be very worried about how they will manage if they are withdrawn.

"Our fear is that setting a date will give the green light to banks and retailers to withdraw cheques even earlier than 2018, as some already have."

The number of "Faster Payment" direct transfers between bank accounts, where money can be sent instantly using a recipient's account number and sort code, now runs at one million per day.

- INDEPENDENT