News

Cheques to be abolished by 2018 2

Fundraising | Celina Ribeiro | 16 Dec 2009

Cheques will be phased out as legal tender by the end of 2018, according to a decision made today by the Payments Council Board.

The board today announced that it will close the central cheque clearing by 31 October, 2018 in response to the long term and what it called “terminal” decline of the payment form.

Civil Society first reported rumours that the council was expected to announced the decline of cheques last month, when some charities expressed concern about how this would impact on their processing payments – particularly from older donors.

Paul Smee, chief executive of the Payments Council, said: “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."

Cheques to be abolished by 2018

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Scott Gray
Managing Director
Rapidata Services
18 Dec 2009

While this may seem alarming, a lot can happen in 8 years and the Payments Council has committed to review the decision in 2016, ensuring that suitable payment alternatives are available. For example, 8 years ago smartcards and payment by mobile phone weren’t yet on the scene.

Providing that charities are well prepared, this move is a positive opportunity to engage with supporters and convert them to more cost-effective means such as Direct Debit or Credit Card. Rather than letting the banks decide whether or not to continue to accept cheques, the Payments Council has decided to actively manage the process. This will accelerate the development of new, cost-effective payment alternatives. But, charities need to start thinking now about the implications to their income if cheques were no longer available and make preparations or they may risk losing donations.

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Dan Fletcher
Head of Partnerships and Fundraising
The King's Fund
17 Dec 2009

Much of the debate/indignation at this decision relates to how older people will supposedly need to adjust to using plastic instead of paper money. One issues that is missing so far from the discussion relates to other forms of fundraising, such as trusts fundraising. Many small to medium trusts have low administration resources, and simply write cheques in order to dispense their grants. They don't have the personnel or technology to phone through a grant or use a BACS process to make their gift.

Dispensing of cheques may have a retrograde impact on small trusts that operate in this way, and provide key funding for some charities.

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