Cheques to check out?

11.42.00pm GMT Tue 15th Dec 2009

Reports are abound today that the Payments Council will vote tomorrow, 16/dec to phase out cheques.

Maybe I'm a cynic.

• The government has just moved to ban credit card cheques.

• The banks have been forced to clear electronic transfers in hours, not days.

And now they claim that cheques aren't being used and electronic transfer is the way forwards. Hmmm.

The articles tend to major on older customers preferring cheques, but I can see a number of other issues. Easy ones first.

• Photo opportunities.

This ones was an afterthought, but what about those lottery winners and corporate philanthropy photo ops? I don't see them all gathering around a computer to transfer the money being up to scratch.

• Tradesmen.

Other than paying by cash, I've yet to see an effective way to transfer funds; very few I deal with are up for electronic transfer. I did pay for some damp work this way, but that work was invoiced for.

• Societies.

Banks don't like them anyway. But many voluntary organisations need a bank account, and generally, this will mean cheques are used to move the money. Generally two signatories are obtained for each cheque. How will they do that electronically?

• Postal payments.

Given a chance, I'll pay for things via online banking, but it is quite a lot of hassle, particularly which all this chip and pin nonsense I have to do now. So there are times when its quicker to write a cheque.

Organisations I don't deal with often in particular aren't worth the hassle.

The tax man is a bloody nightmare. Check which of the two offices issued your statement, and pay into the right account for that office. Oh, and the account numbers have changed since last year. Pay into last years account or the wrong office's account and we may lose your money. I'll be paying by cheque, though I've still got to wait and see which office bills me.

• Getting money back.

When you get a refund from a utility company or council they don't generally put the money back where they got it from.

Sometimes because they don't have your bank details, but mostly they just send a letter with a cheque to tear off the bottom. It's the process and systems they've built.

Utilities companies, councils, etc. are customers of the banks too - seems they're going to have to spend quite a lot moving to electronic means.

• Audit trail, trust?

I think a lot of small businesses use the cheque as part of their audit trail.

Paying the building maintenance company, for example, or clearing invoices with other organisations. Its quite difficult to track down payments that have been made electronically if the person sending it doesn't provide the right info., or if its not showing on the statement.

And as individuals, we don't really trust people with our money, and so getting a refund or closing an account with a financial institution involves a cheque that we know we received that we can then entrust to our bank.

Banks claim it costs £1 to process a cheque. I'm slightly curious why they don't propose instead to pass on that cost. 25p per cheque to get a book sent to me, 50p to the recipient, the rest an incentive to the bank to cut the processing costs! If the recipient doesn't want cheques, then they pass the cost on to the customer, if they do, then its a cost of doing business.

http://www.guardian.co.uk/business/2009/dec/15/cheques-bounced-out-history

http://news.bbc.co.uk/1/hi/business/8414341.stm

possible workarounds?

http://www.guardian.co.uk/money/2009/dec/19/cheques-out-everyday-payments