It is thought to be around 350 years ago that the first cheque was ever written.  Since that date, cheque usage has risen and fallen, reaching a peak at £2.4 billion in 1990 and falling steadily since.  Now the fate of the cheque is under review.  

The board of the UK Payments Council has set a date of October 2018 to aim for a complete phase-out of the use of cheques.  There is a proviso of course that this can only happen if adequate alternatives are developed, but the decision has been criticised as being out of touch with certain sectors of the community. 

The board has described the cheque as in ‘terminal decline’ and in setting the phase-out date; hope to encourage the advance of other payment types.  However, in consulting with other bodies, it could well be that the Payments Council receive a surge of support for this more traditional method of payment.  

Although many stores no longer accept cheques, and in spite of them being the most expensive form of transaction for shops, many rural businesses rely on this method of payment.

Rural businesses represent a large number of small businesses where alternative methods of payment have not yet been implemented.  The cost of setting up and working with ‘chip and pin’ is often too expensive to be worthwhile, and many rural areas still have issues with the necessary internet access.  

Ian Goodwin, partner and head of agriculture at local law firm Lanyon Bowdler comments “Many rural businesses cannot afford the cost of utilising electronic payment methods and, until a viable replacement is found, cheques are vital to the way those rural businesses operate”.  

There are alternatives being proposed, such as ‘chips’ to be used with sensors and the use of mobile phones, but these still fail to address the potential problems with access and signals in rural areas and also the ability of users – particularly where they fall into older age groups.

The Treasury Committee is likely to have a hearing in mid June further to reviewing responses to the proposals, but without working and affordable alternatives, the phase out of the cheque could cause big problems for some.

For more information, contact Lanyon Bowdler.

(pic: Ian Goodwin, Head of Agricultural Dept, Lanyon Bowdler)