Cheques may soon disappear in the UK and we may live to regret this move.
Cheques are an example of what I call downteching: the smart use of low tech products or processes in a high tech environment.
ie we no longer need cheques but they can have occasional advantages and we should be careful not to lose them. This is not about being nostalgic, I am suggesting it is about being smart.
Cheques use has been falling dramatically, with now less than a million a day being written.
Banks profits are squeezed, meaning there is cost pressure to abolish cheque books and the cheque clearing system.
A UK regulatory body requires banks to maintain the system, however the banks are not encouraging cheque use, leading to a continued decline.
At some point, the banks will claim minimal and uneconomic demand and the end will come.
Once the cheque clearing infrastructure goes, the system would be dead even if individual banks wish to continue.
Denmark is the latest country to abolish cheques, with Belgium and Finland starting the trend in the 90s. The UK and US remain the only countries where a sizeable minority continue with cheques.
Cheques do not have any exclusive advantages over other forms of funds transfers. However their slower, more considered form of transaction format, combined with the fact that they are outside the hackable web should mean they deserve their place in the future.
In a 2 Feb 2017 The Times article by Ian King
“Cheques are way out of date and it’s time they were written off”
King supports the banks – “net interest margins have been crushed.
UK Regulators could help by offering to abolish cheques”.
King gives the recent history ie that in 2009 the Payments Council proposed to abolish cheques by Oct 2018. The proposal was however dropped following protests.
He notes that cheques cost banks around £1 each fully costed and that a new Image Clearing system has been mooted but this would be an uneconomic investment for small number of users (although, March 2016 – Cheque & Credit Clearing Company now states that by the end of 2018 cheques will take one working day to clear)
“The Payments Council is now abolished and replaced by Payments UK, but this has no regulatory powers. The power now lies with the Payment Systems Regulator (arm of the FCA)”
My bank (Lloyds) no longer provides new cheque books automatically. My local branch stated that “they are trying to phase them out”
Do you have specific reasons to save cheques?
Is your bank trying to influence you to stop using cheques?
Please share your thoughts.
Lets keep a watch on the banks and lobby the Payment Systems Regulator as needed.
downtechinglondon.com dedicated to downteching: the smart use of low tech products or processes in a high tech environment.