Why are cheques free?

Mikeyorks

NFH wrote: »

The fraud risks are considering higher for cheques.

£30M in 2009 and continuing a trend of lower losses over 10 years.

Card fraud at £600M in 2008 and continuing a sharply rising trend over the previous 9 years.

You seem to be making figures up to suit yourself? The majority of the 3.5M cheques going through Clearing each day are either business --> business or business --> personal. Very few issued from personal cheque books.

NFH

Mikeyorks wrote: »

£30M in 2009 and continuing a trend of lower losses over 10 years.

Card fraud at £600M in 2008 and continuing a sharply rising trend over the previous 9 years.

Your figures are not per transaction and are therefore not a comparison of risk. You need to compare the percentage of fraudulent transactions between FPS and cheques. Also the scope for fraud on FPS is inherently lower than for cheques.

NFH

lippy1923 wrote: »

the banks make their money back from idiots who issue cheques with no funds in their accounts, (which get returned) and then charge them

Yes, and they often charge the unfortunate payee as well.

Mikeyorks

NFH wrote: »

. Also the scope for fraud on FPS is inherently lower than for cheques.

That will be why ...... close to 3 years on from the significantly deferred date for FPS ....... a lot of Banks are still 'rolling out'?

opinions4u

the scope for fraud on FPS is inherently lower than for cheques

A cheque can be stopped. The risk of fraud on FP is higher.

olly300

NFH wrote: »

Indeed, but it's odd that the same charges don't apply to personal accounts. In view of the higher charges for businesses of receiving cheques as opposed to electronic payments, it's also odd that very few UK small businesses print their sorting code and account number on invoices, which is common practice in other countries.

Not all small business owners pay for cashing or writing cheques - it depends on their usage of the method.

If you run a business where most of your customers and suppliers will either pay or accept payment by electronic means or by card payment then you choose the appropriate account that costs you the least money to run.

And more and more small businesses will start printing their sort code and account number on invoices - in fact the plumbers, electricians, builders, graphical designers, solicitors and accountants I've dealt with have. However as lot of small business mainly shops and garages accept card payments so they have no need to rely on bacs payments and give out their bank account details.

NFH

opinions4u wrote: »

A cheque can be stopped. The risk of fraud on FP is higher.

Not true. A cheque cannot be stopped after the recipient has received the money (unless stolen or fraudulent). Likewise, FPS cannot be stopped after the payee has received the money (but you can't steal FPS or fake it). There is no difference between the two methods in respect of stopping payment after the money has been received.

opinions4u

NFH wrote: »

Not true. A cheque cannot be stopped after the recipient has received the money (unless stolen or fraudulent).

Again, you are changing things to suit your argument. A cheque can be stopped before the recipient receives the money. A cheque being credited to an account has a manual intervention. And we are talking about fraud !!!!!! so I don't quite understand why you are arguing that a cheque can't be stopped unless theft or fraud is involved. It rather proves the point that fraud prevention on cheque transactions is stronger.

Likewise, FPS cannot be stopped after the payee has received the money (but you can't steal FPS or fake it). There is no difference between the two methods in respect of stopping payment after the money has been received.

Yes there is.

A Faster Payment lands in an account (usually) immediately after sending. The fraudster does a runner with the money and all is lost. Click <send> and the money's received at the other end and withdrawn before anybody knows.

A cheque gets deposited - requiring manual intervention by receiving bank - and then goes through the 2-4-6 clearing cycle. At any point in that clearing cycle the two banks involved in the payment of that cheque have a further opportunity to identify fraud and stop the cheque - as you've just stated. If that identification of fraud happens before the cheque is paid, as often happens, there is no fraud loss.

So how on earth can you argue that the two payment methods carry the same fraud risks? One gives a window of seconds. The other a window of days. They are very different risks and the risk on a FP is higher.

Olipro

I think it should be pointed out that in the process of handling a cheque, it gets scanned and turned into an electronic format - dealing with them is really not that different from electronic transfers once they are scanned in.

secondly, do you honestly think the banks would pass on the savings from scrapping cheque clearance? hell might freeze over too.