From Thursday 30 June 2011, Cheque Guarantee Cards will officially go out of service. You can still carry on using your cheque book but it might cause the person receiving the cheque to think twice about accepting it.
It was in 1969 that Cheque Guarantee Cards were first introduced in the UK. Those days, shoppers and businesses relied mostly on cash as cheques were mistrusted because of the fear of fraud. The Cheque Guarantee Card System was introduced to help promote confidence and the wider use of cheques.
42 years on, cheques are still relied upon by people to pay for the services of local tradesmen.
At the moment, when a customer writes out a cheque for less than £50 or £100 the cheque is guaranteed by the bank to be paid as long as the cheque is handed over in person and the cheque guarantee number is written on the back of the cheque.
When the guarantee ends on Thursday, many businesses believe that cheques will start to bounce once the guarantee is removed and subsequently chasing customers for payment will cause chaos and money!
Last year, guaranteeing cheques cost Banks £43m because of fraud. They say that only 7% of cheques used are covered by a guarantee anyway. They want to tackle the issue of fraud head on and remove the risk and confusion that exists.
The first group of people to be affected by the removal of the Cheque Guarantee will be train travellers. Train companies say they will NOT be able to accept cheques from Thursday 30th June because of the risk of fraud. So, if you travel by train you will have to find an alternative way to pay for your journey.
Despite the fall in their use, Cheques are set to continue for the next 7 years but it is sensible to look for an alternative to cheques like debit cards, credit cards or direct payment over the internet.
For More detailed information see the BBC Business page here
