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Payments Council must propose paper-based alternative to cheques, says government

Payments Council must propose paper-based alternative to cheques, says government
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Payments Council must propose paper-based alternative to cheques, says government4

Finance | Gareth Jones | 8 Jun 2011

The government is insisting that the Payments Council’s proposals for an alternative to cheques must include a paper-based system, Lord Sassoon has revealed.

Speaking in the House of Lords, the Conservative commercial secretary at the Treasury referred to the government’s insistence that the Payments Council must have an “available, acceptable and widely-adopted alternative system” to replace cheques, and said: “The government have been clear that that must include a paper-based system.”

When asked by Labour’s Lord Hughes of Woodside why the Payments Council was “bothering” to replace cheques with another paper-based system, Sassoon said the decline in use of cheques has meant “it will require a very expensive rewrite of the clearing systems if it [the cheque system] is to continue in its present form”.

Speaking to civilsociety.co.uk, Institute of Fundraising director of policy and campaigns Louise Richards said she was aware of that requirement for a paper-based alternative, but that it was hard to come to conclusions without seeing the proposals.

“I’m on the Payments Council liaison committee for the voluntary and charity sector, and we keep saying ‘if there are alternatives, let’s see them’. We don’t know if they’re viable or accessible if we haven’t seen them.”

However, she added: “The second thing is if they are going to introduce a paper-based system then why abolish cheques, it doesn’t make any sense whatsoever.”

When asked about the cost to banks of a new clearing system, she said: “That statement underlines the fact that the only winners in this are the banks; this is all being done to save them money.”

Later in the debate, Liberal Democrat Baroness Kramer raised the example of Germany, saying that following the abolition of cheques, people who did not want or who were unable to make online payments would simply keep large quantities in their home or their pocket.

Richards said this tallies the arguments the Institute has made about vulnerable people, with research from Age UK showing that 6.3 million people over the age of 65 don’t have access to the internet in the UK.

M Babington ACIB
retired bank officer
13 Jun 2011

The charity that I work for is almost entirely dependant upon cheques for receipt of donations, fundraising, and for payment of volunteer expenses. Having a card reader would involve a cost to the charity. Surely if donors wanted to pay by internet they would have to have prior knowledge of the charity's bank details and obtaining these and setting up the payment is more complicated than dropping a cheque in the post. Would not have been contemplated 'in my day', when customers mattered.

Brian Wood
Treasurer
Addenbrooke's Kidney Patients Association
10 Jun 2011

We are a small local charity; 95% of our financial transactions involve cheques. We receive donations by cheque, even money that is raised on internet websites is paid to us by cheque. We make welfare payments to patients, often elderly and infirm, by cheque. Any alternative that I know of would not work. It is already difficult enough to raise money and run a small charity. Without cheques I think we would have to close down. I believe this is true of most small charities and small businesses.

Michael Ogden FCIB
Retired Banker
9 Jun 2011

I think the plan by the banks to announce the possible banning of cheques by 2018 without having an alternative in place, is a possible PR disaster for them. They want to save or reduce the approx £1bn in cost of handling cheques per year. And it appears they want to do it without any heed to what some of their customers want, the some 6.3m people over 65 who neither have or want the internet. No political party would dare scorn the needs of such a large group in the population but the banks sail blithely on! They have apparently looked at 'truncation' but rejected it on cost grounds. Yet, this has been implemented in the USA, several European countries, India, Singapore, Hong Kong, Malaysia, & New Zealand. The government needs to enshrine the cheque in law to protect the vulnerable, as it is in France. The banks showed little judgement in preventing the meltdown of the banking system through their profligate lending and similarly are showing poor judgement now.

A Jackson
8 Jun 2011

Abolishing cheques is a ridiculous idea. Thankfully I have debit and credit cards and use internet banking. However, there are times when I need to use cheques, ie for window cleaners, a small local garage, paying my sister when she buys something on-line for me, paying for odd jobs around the house and garden. All these people are not going to be able to accept a card or accept payments by direct debits. Why abolish cheques to replace it with another paper based system. The cheque process works, don't break what's not broken.

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