When will cheques be phased out by?

In December, the UK Payments Council set a date of October 31, 2018 to close the central cheque clearing system, prompted by the steady slowdown in cheque transactions. The Council said that use of the cheque is in “long-term terminal decline”.

At the height of their popularity, 11 million cheques were written each day, but this figure dropped to 3.8 million a day in 2008 and has decreased even furthersince then.

The move will mark the end of a 350-year-old payment method.

Is everyone agreed on this change?

The majority of large retailers have already latched on to the trend of phasing out cheques. From March 1, 2008, M&S ceased using cheques. Argos, Boots and Next are among other retailers that no longer accept the payment method.

A spokesman from the British Retail Consortium said regarding the decline of cheques that “there has been no drive by retailers to ‘kill off cheques’ - it is customers who have rejected them”.

The decision will save banks hundreds of millions of pounds a year, because each cheque costs about £1 to process, compared with a few pence for electronic methods such as paying by debit card.

Banking Association senior general manager Stuart Grobler, emphasised that “it is not a final decision” and there will be a review in 2016 as to whether the proposed changes take into account the needs of elderly and vulnerable people.

Some in the business world are still not in favour of the transition due to the impact on, for example, small businesses, where cheque usage is higher. The Federation of Small Businesses said that the decision was “disappointing”.

What are the alternative forms of payment for the future?

Payments Council chief executive Paul Smee said that, over the next nine years, the Council will “promote and explain existing alternatives” to cheques and put new options in place where required.

Smee also reassured existing users that “customers aren’t likely to see any immediate change, as the target date is still a long way off”.

An alternative method to paying with cheques could be an increased use of debit cards. Making more use of the web and online payment providers such as PayPal to transfer money are also suggested as potential alternatives.