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December 17, 2009 – Comments (3) | RELATED TICKERS: RBS

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http://www.theglobeandmail.com/report-on-business/britain-bounces-cheques-after-300-years/article1402323/

 

Britain bounces cheques after 300 years

 

Elizabeth Fullerton

London — Reuters Published on Wednesday, Dec. 16, 2009 11:13AM EST

After more than three centuries, the humble cheque could become a historic relic if British banks, as expected, vote to phase it out in favour of more modern payment methods.

The board of the UK Payments Council, the body for setting payment strategy in Britain, was meeting on Wednesday to discuss whether to set a date of 2018 for winding up the cheque clearing system. The board is largely made up of Britain's leading banks.

The use of cheques has fallen drastically in the past 10 years as more consumers transfer money electronically, by direct debit or with debit and credit cards. Last year, around 3.8 million cheques were written every day in Britain, compared to a peak of 10.9 million in 1990, the council said.

It costs about one pound to process every cheque.

“The next generation probably won't even have a chequebook,” said Addy Frederick, a spokeswoman at the payments council.

But while many U.K. supermarkets, high street retailers and petrol stations have stopped accepting cheques, they are still a popular form of payment among elderly people, many of whom find the idea of using automated cash machines intimidating.

“Chip and pin is problematic for many older and housebound people and we know 6.4 million over 65s have never used the internet,” said Vicky Smith, a spokeswoman for the charity Age Concern.

“Without cheques, we are very concerned people will be forced to keep large amounts of cash in their home, leaving them vulnerable to theft and financial abuse.”

Harriet Harman, deputy leader of the ruling Labour Party, said on Wednesday the authorities must take care not to discriminate against the elderly in making their decision.

“We need to look to the future but make sure that older people don't suffer as a result,” she told parliament.

Cheques have all but disappeared in high-tech countries like Sweden and Norway and their use is under review in Ireland, South Africa and Australia, Frederick at the council said.

The oldest surviving cheque in Britain was written in 1659, according to the council and made out for £400 (equivalent to around £42,000 today). It was signed by Nicholas Vanacker, made payable to a Mr. Delboe and drawn on Messrs. Morris and Clayton, scriveners and bankers of the City of London.

In those days, cheques would have been exchanged informally in coffee houses. It was not until 1833 that the first clearing house was built in London to exchange cheques.

3 Comments – Post Your Own

#1) On December 17, 2009 at 11:41 AM, drgroup (69.40) wrote:

Is there anything the Brits haven't tried to inact which will screw up their economy. One of these days they will get it right and be able to boast of being totaly fascist.

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#2) On December 17, 2009 at 12:24 PM, Turfscape (45.11) wrote:

I am very, very on board with this idea. Paper checks are so completely useless and unnecessary. They add to the overhead of banks, slow down transactions, and provide one more opportunity for fraud.

Now, I don't think it needs to happen as a matter of congressional action here in the U.S. Banks should see the writing on the wall and be looking to make this move on their own. But I'm sure fear of losing customers to the inevitable one or two institutions that remains open to paper checks is too powerful an incentive to keep status quo.

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#3) On December 18, 2009 at 4:51 AM, MGDG (34.61) wrote:

I would agree that checks are of limited use for most, but this past summer my city utility services for water, trash and sewer have decided to charge a fee if you pay your bill online. These are 3 separate entities, one public and two private. So I had to dust off the checks to avoid the fee. I almost forgot how to fill one out properly.

This seems rather odd as I would think the cost for them to process a check manually would exceed their cost to receive a payment electronically by computer. It seems many companies have been breaking overhead costs down into separate line items and begin charging fees for them, whereas these were normally associated with the cost of doing business and reflected in the rates.

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