Cheques to be phased out by 2018
Firms will need a simple alternative to cheques, says FPB
Business groups have called for a simple and reliable alternative to cheques following news that the 350-year-old payment method is to be phased out.
The UK Payments Council announced today that cheques in the UK would be phased out by October 2018. The board said the use of them was in ‘terminal decline’.
The Forum of Private Business (FPB) said that while it understood many business owners may have serious concerns over the decision, it was not opposed, in principle, to phasing out the use of cheques.
However, the business group said banks would need to find a suitable alternative for businesses before the 2018 date.
“Around half of our members still use cheques and we fully appreciate that many individuals, particularly older people, rely on their chequebooks to make payments,” said FPB policy representative Matthew Goodman. “However, cheque use is becoming an increasingly expensive option for businesses. And as cheque use declines, the banks will impose ever-greater costs on the firms who still use them.”
Goodman said that while it would be easy to criticise the decision to phase out the 350-year tradition of paying by cheque, it was necessary to take a ‘pragmatic approach based on the reality for small businesses’. He added: “We believe that the better option is to use the publicity this issue has generated to pressure the banks into coming up with practical, convenient and cost-efficient alternatives to the cheque – a ‘third way’ which will benefit all parties concerned.”
One suggested alternative is a paper-based system similar to cheques but one which is cheaper to use and has a faster clearing process.
© Crimson Business Ltd. 2009