The end of Cheques? - Treasury Contents

Written evidence submitted by the Campaign for Community Banking


  CCBS considers the decision of the banking industry to force the demise of the cheque in just eight years from now to be undemocratic and premature.

  It will impose costs and obligations on others, whilst reducing its own, not least in relation to a likely increase in use of cash to provide some of the flexibility offered by the cheque.

  In the light of the above we would like to see more consumer involvement in the interim appraisals of alternative payment mechanisms and attention paid to the implications of increased cash usage in the context of a diminishing availability of local branches and what could fill that vacuum.


  1.1  The Campaign for Community Banking Services (CCBS) is a coalition of 22 national charities and membership organisations sharing concerns over the adverse impacts on individuals and communities of bank branch closures. Its objectives include finding alternative physical delivery methods for banking services.

  1.2  There is no doubt that use of the cheque is in permanent decline as evidenced by the industry data but at c 1.4 billion cheque transactions a year it remains significant.

  1.3  CCBS maintains that the natural rate of decline in usage has been artificially accelerated by the decisions of major retailers and service providers, such as the rail companies, not to accept cheques. This has been an abuse of "complex monopoly" power which individuals have been unable to challenge.

  1.4  CCBS also contends that the deciding body, the Payments Council, has acted as a monopoly in that its board comprises an overwhelming majority of representatives of banks whose economic interest is clearly in moving payments from paper to electronic impulses.


  2.1  Given where we are, the principal impact of withdrawal of the cheque will be on small businesses, those that are employed by them and their customers.

  2.2  Organisations representing these constituencies will have provided you with evidence and examples of how they will be disadvantaged but the loss of flexibility that this payment method possesses is to be regretted and will be experienced by traders and customers alike especially re services provided in the home from music lessons to tree felling, one-offs perhaps more than regular.

  2.3  In our view the biggest impact will be in the increased use of cash which has all the flexibility of the cheque, plus for some the advantages of no audit trail, but provides no time buffer, lacks inherent security protection and increases vulnerability to theft for both payer and recipient. In the case of retail small businesses the holding of more cash leads to higher insurance premiums.

  2.4  The loss of the valuable protections the cheque offers over cash is serious:

    — for small businesses;

    — for the elderly and housebound;

    and is likely to lead to an increase in crime and for convenient local cash dispensing and collecting facilities at a time when, in the absence of progress with alternatives to branded branches, many more communities will have lost their bank branches and have only fee paying ATMs.


  3.1  The industry's aim is reduce transaction costs, apparently by dehumanising payment methods and make them electronic as far as possible.

  3.2  There are big advantages in this for the banks, not least in cost, but also for consumers: wave and pay at car park meters for example.

  3.3  However there has to be a balance and it is CCBS' fear that by setting a date as early as 2018 for the effective demise of the cheque—the end of the cheque clearing system will render the process of collection too expensive for it to survive—gives too little time for satisfactory alternative methods to evolve and, importantly, become familiar to the population, especially the most vulnerable.

  3.4  It is for others to analyse the alternative instruments which have already begun to appear such as wave and pay cards, pre-pay cards, mobile phone technology but all would appear to have disadvantages and provide difficult challenges for the most affected groups.

  3.5  What is important now is for the development and acceptability of the industry proposed alternatives to be vetted and monitored in the intervening years by a body with much more relevant consumer involvement than in the decision making so far. CCBS would like to see this undertaken in the context of the current trend of diminishing branch network reach and consideration of how the resultant physical delivery and customer inquiry voids might be filled; by shared branching, post offices, etc.

February 2010

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