at least until 2018?
Following the cessation of the cheque guarantee card on June 30th this year by all major high street Banks and 3 weeks after the abolition it seemed an appropriate time to de-mystify what the cheque guarantee scheme stood for and why cheques will still be in use at least until 2018.
Leading up to the abolition of the cheque guarantee scheme Jeremy Vine in his Radio 2 program had a lively topical discussion on the subject.
Amazingly, few people understood the cheque guarantee scheme and there was widespread concern among the British public that by losing the cheque guarantee card, consumers would not be able to continue to pay bills as had been customary and in all probability cheques would follow suit and be abolished altogether in the not too distant future too!
What was a guaranteed cheque?
A guarantee card used by businesses and retailers to guarantee a cheque to the value of £50, £100, 0r £250. For a cheque to be guaranteed, it had to be handed over with the card carrying the shakespeare logo or hologram and the retailer had to comply with the guarantee scheme.
Why was the cheque guarantee card withdrawn?
Over the last twenty years the use of guaranteed cheques has fallen dramatically in 2010 86% of consumers did not write a guaranteed cheque and nearly 22% have never written a cheque! The use of guaranteed cheques has fallen by 65% in the last five years alone and in 2010, of the 1,113 million cheques written only 7% or 82 million were actually supported by the cheque guarantee scheme.
The guarantee was often not an essential part of the transaction and was void if the cheque was posted. The average transaction value of a personal cheque was £392 but the maximum guarantee limit on a card was £250 with 88% of cards only offering a limit of £100 or less!
Over the previous six months leading up to June 2010, only 350,000 businesses received a guaranteed cheque.
Can I still write a cheque after June 30th 2010?
As consumers and businesses we can still write and accept cheques without the guarantee. We can decide if we are prepared to accept a cheque; you will still be able to make payments such as person to person payments and bill payments.
What’s going to happen to the cheque?
Although cheques are in decline, the Payments Council has set a target date to close the central cheque processing system in 2018 on the proviso that there are adequate alternatives to the cheque in place. 2016 is likely to be the deciding date for the future of the cheque.
In the UK more and more of us are paying with a chip and pin card for our goods and services. In business the usual protocol is BACS or CHAPS
(for more urgent payments) or direct debit and standing orders
I am pretty sure most of us write personal cheques I continue to write cheques for school events, trips, book clubs is a favourite when the children come back with another book collectors club magazine, membership for the athletic club is another example where the only way to pay is by cheque so for such small amounts it is difficult to foresee what the alternatives are likely to be be?
As of July 12th 2011 the Payments Council announced that “cheques will continue for as long as customers need them and the 2018 date for closure of the cheque clearing scheme has been cancelled.
For any advice on cheque printing, bank cheques or security printing please get in touch!
Let us know what you thoughts are on the above? Do you have any concerns about cheques being replaced? Are you still using cheques?