MSE News: Cheques to disappear by October 2018

james_joyce

Extant wrote: »

Implementing new payment systems is far from cheap. They cost in the billions to develop the technology, pay for the man hours, formalizing standards, making the system secure, etc.

If you want a nice example of how the industry won't invest this money unless pushed - regardless of the pros and cons of whatever currently exists - take a look at BACS and FPS.

So to follow this through, in this case the industry will not be pushed until 2016 when the final decision is taken. At that point they will know for certain that cheques are to be abolished, and they will start innovating (which they won't have done previously because they don't innovate when there is uncertainty).

Then in the following two years they will do lots of innovation, invent new systems, develop them, formalise their standard make everything secure, and fully implement them.

Because the Payments Council in 2016, know that the above will happen in the two years available, they will have confirmed the decision to abolish cheques (and presumably with full public support, although of course it is not the public's decision to make).

That is of course, because they will be in the 'circumstances of 2016 not 2009' - even though the relevant payments technology will be the same then as it is now.

Sorry I don't see how that makes sense. I must be missing something.

Extant

james_joyce wrote: »

Sorry I don't see how that makes sense. I must be missing something.

The decision will be made in 2016 on the basis of the development between now and then - now on the idea of development between 2016 and 2018.

Basically, it's an ultimatum - don't want to handle cheques any more? Sort something out.

The underlying payments technology may very well be the same by the time the decision is made. But that's not the important thing - the idea is to change how this technology is accessed. It's not about replacing cheques with more of the same, it's about making sure that people can still process their payments in an easy fashion and without "trapping" certain sectors by removing the facility.

For people who pay their bills at the bank with a cheque, that might be changing how the bill is processed - an example from above being a barcoded bill which can be used to initiate an electronic payment. For people who need to accept payments when mobile - small traders etc. - it might be about improving their access to card payments, letting them become cheaper due to increased competition.

It's about what comes out of the mill between now and 2016, not after then.

james_joyce

Extant wrote: »

The underlying payments technology may very well be the same by the time the decision is made. But that's not the important thing - the idea is to change how this technology is accessed. It's not about replacing cheques with more of the same, it's about making sure that people can still process their payments in an easy fashion and without "trapping" certain sectors by removing the facility.

Right so one argument for setting a date for getting rid of cheques is the required cost ("in the billions") of replacing the technology, which won't get spent until uncertainty is removed. But then if the technology is not changed, cheques still need to be abolished anyway - and this won't actually need new technology, it just needs the existing technology to be used in a different way! (Presumably this won't cost in the billions. If it did, presumably it also wouldn't happen between now and 2016 due to the uncertainty!)

I would have thought the latter - ie the change in the way existing technology is used - could be done (relatively) easily in parallel with cheques remaining in existence. Indeed in the short term it would have to be anyway, unless it's proposed that one day a switch is flicked and the existing technology swaps from 'cheques' to 'not cheques'.

It's this "either/or" that I don't understand. As I have said I am very comfortable with all sorts of new technology (and/or uses of existing technology) being developed and used by people in ways they didn't expect. I'm also happy for cheques to remain in existence. I don't see a contradiction between the two.

Rosemary7391

Surely one could make some kind of 'e-cheque' - have a barcode on it or something, then the recipient adds their sort code/account number, takes it to the bank who checks that it all adds up then initiates an electronic payment? That way those who find a use in cheques can carry on using them in much the same way, but the paper clearing system can be stopped.
I personally do like cheques - apart from cash, its the only way of paying someone without knowing their account details.

james_joyce

Apologies to anyone who has been trying to keep up with my line of argument during this thread.

We've been dealing with a series of different points and it may be helpful if I try to summarise my position, as follows:

As I understand it there are two main arguments against keeping cheques in existence:
- Firstly that there are various costs involved with keeping cheques. I accept this, but think the overall cost is relatively small in the grand scheme of things, and it is reasonable to ask the banking industry to cover this cost, bearing in mind the amount of money which the taxpayer has (rightly) lent the industry over the past year or so. The net cost of this lending was estimated in April to be between £20bn to £50bn, but we don't yet have the final figure of course.
- Secondly, the continued existence of cheques will somehow prevent new technologies from being developed. I say this argument doesn't make sense, because the new technology - or new uses of existing technology - will have to developed whilst cheques are still in existence, in order for the final decision to abolish cheques to go ahead. In other words the new technology and cheques must co-exist for a time. If they can do so in the short term, they can continue to co-exist in the longer term. This will no doubt have an additional cost, but this is covered in my first point above.

I am very keen for new technologies to developed and for people to use them, and also for cheques to continue to exist for people who want them.

We need to avoid accepting an artificial division of public opinion into supporters of modern technology on the one hand and supporters of cheques on the other hand. I am very happy to support modern technology and cheques and I am sure there are people who agree with me.

I don't think it's good enough for the banking industry to respond to such comments with phrases like 'It is not your decision to make'. A more helpful response would be 'it is our decision, but we will explain it to you (in terms which actually make sense) and take your comments on board'.

arunadasi

Joe_Bloggs wrote: »

I have figured out why this apparently aimless announcement was made. It going to be left to the ingenuity of the British public to come up with an alternative to the cheque.
If you want to be paid for something then you are going to have to tell them your account number and sort code. The payee can use telephone banking or the internet to transfer the money.
J_B.

Many countries in Europe have abolished the cheque. I can't remember using or receiving a cheque in 35 years in Germany! What they use there as an alternative (this was in the days before internet and telephone banking, which of course is even quicker) is the "bank transfer form", a small slip in duplicate which has your bank details already filled in. You get these the way people in the UK get cheque books. All you have to do it fill in the payees bank details (as given in the invoice) and sign; you keep the duplicate for your records. Pop it into your bank's postbox - voila!
Tradesmen, businesses, doctors etc routinely hand out these slips to those owing them money; in which case their details are pre-filled in, and you fill in your account details.

It works. It really does. Nobody misses the cheque there, and even old people manage.
The other day someone sent me a cheque for almost £400 and it got lost during the postal strike. They had to cancel and send me another and the money, which I was waiting for, took two weeks longer to get to me. Huge hassle all around.

glider3560 wrote: »

The invoice will state: Sort Code: xx-xx-xx Account Number: xxxxxxxxx, Reference 12345678. You then go online or pick up the phone and make the payment. The recipient will appreciate the fact they get the money quickly and don't even need to visit the bank.

Exactly. That's how it works.

BigBouncyBall wrote: »

i dont understand what is going to replace the cheque??

can someone tell me how i pay a plumber or electrician for essential work completed once cheques have been got rid of? I doubt they're going to like leaving me an invoice to pay and hope i do, nor am i prepared to pay cash or be marched upstairs to my computer to make a bank payment there and then.

I just dont see what would replace the current system.

You will see when we are at that stage. I'm sure they are clever enough to figure out something adequate.

arunadasi

Noble_Savage wrote: »

No, in fairness you haven't been hysterical. But some have been - if you went and had a look at the responses this story got on the Daily Mail* website, it would shake your faith in humanity's collective ability to get a grip!

(*OK, not a great example, I know. )

I was one of the commenters to that story in favour of the change, and I described the very efficient German system. You should have seen the red arrows I got for that!:rolleyes:

John_Pierpoint wrote: »

As long as you are not house bound and you don't live in a small town where all the banks have closed down.

Then just pop the slip into your pre-addressed bank envelope, stick a stamp on it, and off to the post box. What, the village is so small you don't even have a post box? You can't walk? Oh dear. Then you really do have a problem, and it's not cheques.

Somebody above described the Swedish system, where you get a special number which is ONLY for paying in. That sounds even more efficient than the German system.

Oh, and re the condescencion towards old people who can't cope with change: my mother will be 91 next year and we communicate by email. Her brain is as sharp as a razor, and though I don't doubt that many old people are change resistant they cannot set the standard for everyone. Anyone who can sign a cheque can also sign a payment slip as described above.

Extant

james_joyce wrote: »

I don't think it's good enough for the banking industry to respond to such comments with phrases like 'It is not your decision to make'. A more helpful response would be 'it is our decision, but we will explain it to you (in terms which actually make sense) and take your comments on board'.

The banking industry hasn't said that at all - I have.

The industry has, however, done exactly what you think they should do - they've taken on board the needs of the consumers, both personal and business, discussed the issues, and committed to developing solutions to them with a final decision being made in 2016.

They've done exactly what you want them to, but the entire world seems to be ignoring it in favour of hyperbolic fervor.

james_joyce

I don't accept I've been using hyperbole (except perhaps by mistaking the views of a banker for those of the banking industry!). From my point of view I've offered reasoned arguments on cost and technology. If I wanted to I'm sure I could find examples of hyperbole on the other side of this discussion.

Let's continue with reasoned comments and not go down this route of accusing each other of hysteria and hyperbole.

richard9991

spenderdave wrote: »

Although the elderly are being quoted as being against this change, I think it stretches far wider. I am both a small trader myself and also treasurer of our local radio club and my church. Many organisations like churches and other small clubs need two signature authority on their cheques and as such we don't have debit or credit cards or payment authority for internet banking transfers. Apart from small items done by cash cheque is the only means of payment (or paying it on a member's personal credit card and getting refunded by cheque). In my business most people pay in cash (normally fairly small amounts) but I do also take cheques. For many small businesses (ie small turnover) it is just not feasible to set up facilities to accept credit/debit cards. Payment via internet banking is a possibility, but how many of you would be happy to give your bank account details to a total stranger and hope they then go away and pay you? Just a few of the things which they have obviously not considered - and presumably the decision will be made on the advantages to the mega-retailers alone, ie profit...

you give your personel account details every time you issue a cheque as sort code and account number are on every cheque that you issue