MSE News: Cheques to disappear by October 2018

cottager

This argument:

spenderdave wrote: »

... 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?

can always be countered by this one:

richard9991 wrote: »

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

I don't believe this is the issue, it's more the reverse. A poster on another thread has the right idea: the real beauty and value of cheques is that the payer doesn't need to know the recipient's account details, so is not limited or disadvantaged in any way by their situation or circumstances, or whatever their reasons may be for not using (or not being able to use) an alternative method of payment, reasons which are many and varied and perfectly valid.

Apart from outlets which no longer accept cheques, they are free to pay whoever they choose by the extraordinarily simple and useful method of writing the payee's name on a piece of paper, indicate their agreement to pay (their signature) and ensure it's received by the extraordinarily simple method of either handing it to the recipient personally or posting it.

That's the challenge in my view: to come up with a suitable alternative or substite which exactly meets these same criteria, i.e. name-based (person-to-person), rather than account-based or electronic, which I think at present every other alternative involves -- bar cash, but cash is not suitable or wise in many situations where a cheque may be used.

Something which doesn't require access to or use of a card, or a PIN, or telephone/online banking, or a computer, or a machine/ATM, or a terminal, or a mobile phone, or visiting a bank branch or post office, or knowledge of the recipient's account details, and so on. Only possession of a bank or other account where their money is held and the payment made from.

Yes, the use of cheques will continue to decrease as it has been. Yes, many people never have occasion to use them now and don't see the point. Yes, in many instances an alternative method of payment can already be used. Yes, there will be more of these (or existing methods may be enhanced) between now and 2016 in ways we cannot yet envisage. Yes, we must encourage a different mindset for certain sections of the general public. All agreed and accepted.

But NO, none of this means that cheques have no place or don't fulfil a valuable role, even if it is a niche role. We will continue to nibble away at the numbers being used and processed for the reasons just listed and others, but at some point I believe we'll hit a 'core' where nothing else will quite match what a cheque can do -- a payment method which is genuinely and universally accessible. This is what needs to be addressed.

james_joyce

cottager wrote: »

Yes, the use of cheques will continue to decrease as it has been. Yes, many people never have occasion to use them now and don't see the point. Yes, in many instances an alternative method of payment can already be used. Yes, there will be more of these (or existing methods may be enhanced) between now and 2016 in ways we cannot yet envisage. Yes, we must encourage a different mindset for certain sections of the general public. All agreed and accepted.

But NO, none of this means that cheques have no place or don't fulfil a valuable role, even if it is a niche role. We will continue to nibble away at the numbers being used and processed for the reasons just listed and others, but at some point I believe we'll hit a 'core' where nothing else will quite match what a cheque can do -- a payment method which is genuinely and universally accessible. This is what needs to be addressed.

Hear, hear (you won't be surprised to hear me say!) :xmassmile

I think there are at least three non-sequitors presented by the supporters of abolishing cheques. (Forgive me for slightly oversimplifying these - I'm sure people can set me straight if this appears unfair):

- If you are in favour of cheques you must therefore be opposed to technologies (new and existing) being developed.

- The continued existence of cheques will prevent these developments of technology but they will somehow be developed anyway between now and 2016 while cheques still exist

- Usage of cheques is falling therefore it is tending to zero (ie not to the non-zero 'core' which cottager mentions)

paulwf

John_Pierpoint wrote: »

It is not better for old people, some of them are proudly independent and can carry on until their signature degenerates and the bank notices.
Long before they get to that stage their wobbly fingers will be unable to key in the PIN number even if they could remember it.

Next step is then "put them in a home", where they will be miserable and costing the rest of us a fortune.
But I expect the technical nerds, who have worked out that it costs £1 to process a cheque have no idea that a significant proportion of the population have trouble seeing a PIN pad let alone using it.

As someone who works in a supermarket that attracts a very high proportion of elderly people there are ways around this in action:

- a son/daughter/carer takes the person shopping and enters the pin for them. This can be easier than having to get the elderly person to sign.

- use a larger number pad to make it easier to read and press the buttons

- cards can be programmed to ask for a signature rather than a PIN, this I see happen quite frequently

So you see if there is some thought most problems can be overcome. Also, and I hope this doesn't sound insensitive, but if a person is incapable of remembering a 4 digit number of their choosing (and there are ways of writing it down somewhere without it being a huge risk) are they really capable of running their own financial affairs?

I've used the same PIN since 1994, it is good to give elderly people a gentle nudge to use new technology, if they had been using a pin for 13 years before it had been made compulsory for purchases I expect most would remember it. I'm not saying this is an easy task as my parents still don't even use a cash machine, but you've got to keep trying

John_Pierpoint

I am happy to accept that the Swedish/German system of mailing a payment slip to your bank, satisfies the day to day needs of the housebound very old.
(I can still remember the fiasco when it became impossible to send the care visitor up to Mr Patel's Post Office with a signed weekly pension slip - giving the care worker a card and pin number was an all together a different order of magnitude)

How much of the inconveniences we now suffer is because our society is riddled with dishonesty?

However, we have not got past the fact that the cheque is a legal entity in its own right. (I think "chose in action" is the legal definition). If you work in trade with the German market, the players EXPECT to be paid almost instantly, there is a culture of paying people as soon as the payment system can physically manage to do so.
Our "Anglo Saxon" culture regards paying invoices as a game, to be stretched out as far as possible. (RIP GEC (UK) - the company with the worst record for such deliberate behaviour).

I provide personal services (stop sniggering in the back row) and, faced with a customer who is being "edgy" about prompt payment; I am 95% happy to be sympathetic and say "You can post date the cheque until next pay day - no problem" I would be 95% unhappy about leaving them an invoice with my bank account details. I would have to employ someone to do all the credit control work such "overlooked" payments would generate.
My alternative would be to use "AND PAY FOR" the bank credit system - I bet that would cost a whole lot more than £1 on a typical 250 quid payment, coupled with the fact that I would have to buy or rent some sort of time wasting technology to carry round with me.
(I have had exchanges like "There we are its all perfect now - could you let me have a cheque?" - No its OK I'll pay you now on line................ (job done, though a slightly different accounting treatment and it takes longer at the customer's premisses) HOWEVER YOU CANNOT ASSUME EVERY CUSTOMER HAS ON_LINE BANKING. When the initial sales lead comes in I don't want to start the discussion with "First things first - If I do this job, how do you intend to pay me!!")

The banks see this as another chance to get the punters into debt by becoming monopoly granters of credit.

I still have not had an explanation of how to arrange a "trust" relationship between people who cannot really trust each other. This can be as simple as forming a committee to organise a charity fun run. Are you going to trust 100% the party animal who gets elected treasurer to collect all the donations and pay out all the loot. Two signatures on every cheque is the basic first level of security.
A successful Chartered Accountant, who had a good track record for identifying fraud, said to me: "You must always have at least two people handling any money and preferably three so if they are all thieves, they can fall out with each other".

John

Extant

John_Pierpoint wrote: »

However, we have not got past the fact that the cheque is a legal entity in its own right. (I think "chose in action" is the legal definition). If you work in trade with the German market, the players EXPECT to be paid almost instantly, there is a culture of paying people as soon as the payment system can physically manage to do so.
Our "Anglo Saxon" culture regards paying invoices as a game, to be stretched out as far as possible. (RIP GEC (UK) - the company with the worst record for such deliberate behaviour).

What does this have to do with cheques? You could still avoid paying an invoice if you wanted to, you'd just send the transfer at a later date.

I provide personal services (stop sniggering in the back row) and, faced with a customer who is being "edgy" about prompt payment; I am 95% happy to be sympathetic and say "You can post date the cheque until next pay day - no problem" I would be 95% unhappy about leaving them an invoice with my bank account details. I would have to employ someone to do all the credit control work such "overlooked" payments would generate.

What if that cheque bounced? You're taking it on trust, and you'd still be trusting them to pay by bank transfer on their next payday. It's still a system of trust.

If the cheque bounced, you could possibly go to court. If the transfer wasn't made, you could possibly go to court.

There is no real world difference here other than a misplaced trust in a post dated cheque. Post dating is irrelevant, by the way - it legally means nothing.

My alternative would be to use "AND PAY FOR" the bank credit system - I bet that would cost a whole lot more than £1 on a typical 250 quid payment, coupled with the fact that I would have to buy or rent some sort of time wasting technology to carry round with me.
(I have had exchanges like "There we are its all perfect now - could you let me have a cheque?" - No its OK I'll pay you now on line................ (job done, though a slightly different accounting treatment and it takes longer at the customer's premisses) HOWEVER YOU CANNOT ASSUME EVERY CUSTOMER HAS ON_LINE BANKING. When the initial sales lead comes in I don't want to start the discussion with "First things first - If I do this job, how do you intend to pay me!!")

Again, as has been repeatedly said through this thread, and you have ignored - this is not a decision being made now. It is going to be made in 2016 based on the access that consumers have to their banking then. Between now and then, the payments industry will work to develop solutions to this issue. It's not about trying to get everyone to use online banking.

And regardless of if they have online banking or not - telephone banking.

The banks see this as another chance to get the punters into debt by becoming monopoly granters of credit.

Are you unable to discuss this issue for what it actually is, i.e. a payments matter?

The removal of cheques is not going to force anyone in to debt.

I still have not had an explanation of how to arrange a "trust" relationship between people who cannot really trust each other. This can be as simple as forming a committee to organise a charity fun run. Are you going to trust 100% the party animal who gets elected treasurer to collect all the donations and pay out all the loot. Two signatures on every cheque is the basic first level of security.
A successful Chartered Accountant, who had a good track record for identifying fraud, said to me: "You must always have at least two people handling any money and preferably three so if they are all thieves, they can fall out with each other".

John

Modern payment systems and multiple account signatories are not mutually exclusive.

Person A initiates the payment instruction, Person B confirms and accepts the payment. It's not something that's going to disappear.

arunadasi

John_Pierpoint wrote: »

However, we have not got past the fact that the cheque is a legal entity in its own right. (I think "chose in action" is the legal definition). If you work in trade with the German market, the players EXPECT to be paid almost instantly, there is a culture of paying people as soon as the payment system can physically manage to do so.
cted treasurer to collect all the donations and pay out all the loot. Two signatures on every cheque is the basic first level of security.

This is not true. There is actually far more trust within the German system than here. Most trademen send you an invoice and give you a month to pay -- for example, delivery of heating oil, doctor, dentist and hospital bills for private patients, etc. Where we tried to get a private doctor here in the UK they said they wanted to be paid in advance; in Germany they wait until you are reimbursed by your insurance before they even send a reminder.
I don't know if this is still true, but even mail-order companies in Germany send the goods with an invoice, and can be paid a couple weeks later.

John_Pierpoint

That is sort of what I was saying - playing silly games and trying to live by juggling creditors is just not the German way. That is why we "Anglo Saxons" need some extra security when we "trust" a debtor.
If a cheque for more than 100 GBP bounces, the supplier can sue. No if's no but's,. That is probably historically why the Bank of England signs our bank notes.
Did you offer your private doctor a post dated cheque:D

olly300

John_Pierpoint wrote: »

That is sort of what I was saying - playing silly games and trying to live by juggling creditors is just not the German way. That is why we "Anglo Saxons" need some extra security when we "trust" a debtor.
If a cheque for more than 100 GBP bounces, the supplier can sue. No if's no but's,.

You can take people to court over not paying invoices regardless of which method of payment you agreed with them if they don't pay the invoice on time after a reminder.

Just for the record with my business account all BAC payments in and out are free. There as cheques payment after a limited number of free ones are charged for.

Extant

John_Pierpoint wrote: »

That is sort of what I was saying - playing silly games and trying to live by juggling creditors is just not the German way. That is why we "Anglo Saxons" need some extra security when we "trust" a debtor.
If a cheque for more than 100 GBP bounces, the supplier can sue. No if's no but's,. That is probably historically why the Bank of England signs our bank notes.
Did you offer your private doctor a post dated cheque:D

The supplier can sue for non-payment, too.

The small trader is still protected by the law without cheques. The larger traders invariably take further steps to maintain a safe risk profile.

John_Pierpoint

Extant wrote: »

The supplier can sue for non-payment, too.

Yes but the supplier then gets all bogged down in counter claims that there was something wrong with the goods and services provided. If you have given a cheque, you have to explain why you paid for self evidently faulty goods & services - much more difficult to try it on.