The end of Cheques? - Treasury Contents

Written evidence submitted by Mrs C.S. Hill

  I was shocked to read a two line report in the press recently that the Payments Council propose to abolish cheques. I then discovered that the Payments Council represents the banking industry. The Council therefore cannot be said to be impartial.

  It is in the banks' financial interest to abolish this method of payment since it costs them to print the cheque books and the cheque guarantee cards. It also serves their best financial interests (though not the economy's) to drive forward an ever-increasing use of credit/debit cards. The banks will argue that the use of cheques has declined in favour of credit cards and I have no doubt that this is the case, driven by a relatively recent action.

  We were told a year or two ago that many major retailers will no longer accept cheques. It was explained to me at the John Lewis Partnership that this is because the banks now combine a cheque guarantee card with a debit card and that this combined card was often used fraudulently and so could not be used to guarantee a cheque. Thus, at a stroke, by this action the banks have deliberately reduced the opportunities to pay by cheque.

  The stand—alone cheque guarantee card is useless without the cheque book and vice versa. My cheque guarantee card is for the value of £50, and has been that figure for decades, in spite of the devaluing of the currency. When I asked for a card to the value of £250 I was told (in writing) that I could only have that value if I combined it with a debit card. I declined, as it would be another card at risk if I lost my purse.

  What about people who do not want to use credit or debit cards? They will have to carry wads of cash if they want to make a large purchase.

  I suggest that mugging would be likely to increase, particularly of the older generation, who are more likely not to use these cards.

  What would abolition mean for the small business or individual trader? Using a credit card facility costs money and for many it would be inappropriate anyway. Would you expect your local painter and decorator to carry a card machine around with him? Cash payments can lead to a "back-pocket" scenario and the evasion of VAT, if payable—not popular with HMRC). Mail order, using a form, currently offers payment by cheque as an alternative to credit card payment. If cheque payments are abolished, this would mean that many people would be denied the use of mail order.

  Why should the banks have it in their power to abolish a method of payment which has served the population and the economy very well for more than three centuries? We have a mind-boggling amount of personal debt in this country and the situation can only get worse with increasing use of credit cards and personal loans. (There are some simple ways of reigning that in, though I appreciate that this is not your brief). Friends of mine remarked that when they visited Iceland some nine years ago, they were astonished to find that no-one used cash, and that credit cards were used for every single transaction, however tiny. Consider where Iceland is now. Do we want to go down that perilous route?

  If the banks are forced to separate cheque guarantee cards from debit cards, retailers in time would regain confidence in the cheque system and that would restrict the ever-increasing use of credit cards. For all the reasons outlined above the demise of the cheque would be a retrograde step indeed. Please do not allow the banks to abolish them.

February 2010

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