The UK Payments Council has agreed to set a target date of 31 October 2018 to close the central cheque clearing.
Cheque use is in long-term, terminal decline. The Payments Council was faced with the choice of either managing the decline to ensure that personal and business cheque users have alternatives easily available to them; or to stand back and let the decline take its course. It has decided that its active involvement can help prevent confusion and deliver cheque alternatives that are acceptable to cheque users. The Payments Council wants to ensure that consumers and businesses are not left high and dry when the closure of the clearing occurs.
Over the next nine years the Payments Council will seek to promote and explain existing alternatives; and where innovation and new options are required to ensure that they are put in place. Although cheque use has been in decline since 1990, falling by 40% over the last five years, there are still plenty of situations where cheques are used extensively. These include payments between individuals, and payments to sole traders, small businesses, clubs, charities and schools.
The payments industry has to rise to the challenge of finding easy-to-use efficient alternatives for these payments and to ensure that they are easily accessible and well understood by cheque users. The goal is to ensure that by 2018 there is no scenario where customers, individuals or businesses, still need to use a cheque. The board will be especially concerned that the needs of elderly and vulnerable people are met. The next step is to identify targets which the Council can measure progress against. It will undertake a full review in 2016 before any final decision is taken.
Chief executive of the Payments Council, Paul Smee, said: “Customers aren’t likely to see any immediate change as the target date is still a long way off. This announcement marks the start of extensive work that we need to do to ensure that everyone has a viable alternative, should the cheque clearing close. We aim to be very transparent and we will continue to consult fully with all interested parties. There will be a critical review in 2016 when the Payments Council will decide whether sufficient change has occurred against agreed published criteria, to press ahead to do away with the cheque in 2018. There are many more efficient ways of making payments than by paper in the 21st Century, and the time is ripe for the economy as a whole to reap the benefits of its replacement.”
The decision follows 18 months of extensive consultation and research to understand fully where and when customers still use cheques, and where alternatives need to be developed. This involved consulting with groups representing consumers including the elderly and consumers with disabilities, and those with other special requirements, and small and corporate business users of cheques.
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