Replacing cheques

Cmdr_Bond

I know that the date of 2018 for phasing out cheques is only a possible date and not a deadline. But seriously, what paper based system can they replace them with?

I have been thinking about this and I honestly cannot think of what they can do differently to allow secure but easy transactions between private individuals or small businesses without electronic intervention of any kind.

Loughton_Monkey

Cmdr_Bond wrote: »

.......I honestly cannot think of what they can do differently to allow secure but easy transactions between private individuals or small businesses without electronic intervention of any kind.

Maybe you're thinking of it the wrong way. Even now there is no way to do transactions without electronic intervention. All transfers have been 'electronic' for years. So all you need to do is seperate two things.

1. The electronic transfer itself (totally the domain of authorised banking institutions).

2. The mechanism by which that electronic transfer is triggered.

Currently, I can 'trigger' a transfer to your account by these methods (and probably more)..

- Write you a cheque.
- Prepare electronic instructions to my bank by Internet banking.
- Put my visa debit card into your machine.
- Telephone my bank.
- Verbally tell the teller in my branch and sign a piece of paper.

Countries like South Korea (with an excellent banking system - totally 'real time' and electronic) do not know what a cheque is. This has never staunched trade or commerce.

My own view is that the banking world in 2018 will survive, using the following tools in addition to what we have now:

1. Total Faster Payments on everything. [Process already started].

2. Cash Machines will allow transfers just like Internet Banking.

3. For the isolated/luddite/granny clients (hopefully a very few percentage), there will be a universal form - used by all banks - on which you write clear instructions of your own account, receiving account, date, amount etc. Sign it, and post it to a bank branch, or take it to Post Office (even Supermarket?). Someone will then transfer those instructions into an electronic format - thence to be 'triggered'. There will be a charge for this service (which might be waived by some providers for marketing reasons).

It's really just a matter of 'process'. We should easily get to a situation in which 99% of transactions can be done Internet/telephone/cash machine.... For the remaining 1%, there will remain a 'cheque' system. But it's just the the cheque system will be developed:

1. Universal cheque (form) for all banks
2. Dismantle large BACS system in favour of 'universal Internet Banking' facility in the hands of authorised PO's Supermarkets, Retailers...

ironlady2022

Very insiteful Loughton Monkey.

I agree with all that you are saying.

Regarding the post, I think they have given this timescale as they will find a method by then to tackle this issue. It is a dying trend no matter how much people still use them. It also eliminates money laundering aswell if we know where the origin is. Also things will be done quicker eg as mentioned through faster payment systems rather than having to wait 4 working days for cheques to clear.

Cmdr_Bond

@ Loughton Monkey

When I said without electronic intervention, I was meaning the method by which the transfer is initiated, i.e. the writing of the cheque.

A very informative post though.

I did a little more nosing around, and was wondering if the Giro system, which allows for instant transfers, would be up to the task of replacing chequebooks? Just a thought.

IMO, It's less to do with purchasing goods and services in shops, and more to do with securely transferring money to people whose account details they do not know. i.e. xmas/birthday gifts or paying a plumber in your home who does not have any card reading facility.

NFH

Cmdr_Bond wrote: »

paying a plumber in your home who does not have any card reading facility.

I frequently ask tradesman for their bank details when they carry out work in my home so I can pay them immediately by FPS. Some have them to hand; some do not. We need to get to the same practice as happens in Germanic and Scandinavian countries where invoices routinely include bank details. When cheques are abolished, plumbers will quickly realise that this is necessary.

noh

There's this:-
http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/telecoms/8320751/O2-seeks-licence-for-money-texting.html

Cmdr_Bond

Interesting link. I think things are moving in the right direction, but re SMS or FPS payments. My point (and one that is being pushed by charities like as Age UK) is that, even in 6 years time there will be people without internet or mobile phones - mostly the elderly who are either confused by technology, afraid of it or simply unable to use it. Who want to be able to pay for goods and services or send a gift, without having to be frog-marched to their bank, an atm or a post office. It is also this group who will be hardest hit by the inevitable charges levied for using an archaic method of payment.

ATEOTD, if there is no paper replacement - then for all intents and purposes, those people who can't or won't use electronic means will have to mix it with those who don't currently have chequebooks. This may mean keeping extra cash around the house for life's little emergencies. Lets just hope the muggings and distraction burglaries of little old ladies (and gents) does not increase as a side effect.

ironlady2022

If there is no choice but to use electronic methods I'm sure the older generation will just have to accept it. I mean mobile phones and internet banking are becoming indespensible. People will just have to accept changes rather than go against it. People in their 70s have a mobile now and if it means a little education then so be it. It's the fact that they will not give technology a try that bugs me.

gt94sss2

Cmdr_Bond wrote: »

My point (and one that is being pushed by charities like as Age UK) is that, even in 6 years time there will be people without internet or mobile phones - mostly the elderly who are either confused by technology, afraid of it or simply unable to use it.

Older people in several other countries already manage without cheques - I'm sure those in this country will also adapt just as well.

Regards
Sunil

derrick

How would one open a new bank/savings account with a new institution that requires a cheque drawn on a personal current account to actually open the new account as is the case now?


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glider3560

derrick wrote: »

How would one open a new bank/savings account with a new institution that requires a cheque drawn on a personal current account to actually open the new account as is the case now?


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They wouldn't need a cheque. Most only use it as an "old fashioned" ID check. There are much more modern checks that can be done that won't need a cheque - even a bank transfer from an account in your own name would work.