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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