MSE News: Treasury Committee to reopen cheques enquiry

Culex

spenderdave wrote: »

One of the problems with on-line payments is that unless the payer puts the correct identification in the REF box it is very hard to establish where the payment has come from. One of the clubs I am associated with has over 700 members, around half of which pay their annual subs by internet transfer. Quite a number of those payments turn out to be impossible to identify, if for instance they just put 'John Smith' in the box.

Exactly!

Paulgonnabedebtfree obviously runs a far more up-market window cleaning company than the chap who comes round here and demands cash in hand when he has finished his (5 minutes max) window clean. I am not sure he would appreciate me paying by internet some time in the future, and most of these chaps most definitely prefer the folding stuff..

Paulgonnabedebtfree also evidently pays his income tax and VAT in full. :rotfl:

Paulgonnabedebtfree

spenderdave wrote: »

One of the problems with on-line payments is that unless the payer puts the correct identification in the REF box it is very hard to establish where the payment has come from. One of the clubs I am associated with has over 700 members, around half of which pay their annual subs by internet transfer. Quite a number of those payments turn out to be impossible to identify, if for instance they just put 'John Smith' in the box.

Paulgonnabedebtfree obviously runs a far more up-market window cleaning company than the chap who comes round here and demands cash in hand when he has finished his (5 minutes max) window clean. I am not sure he would appreciate me paying by internet some time in the future, and most of these chaps most definitely prefer the folding stuff..

Indeed Spenderdave. Many in the window cleaning industry (such as myself) are working hard in trying to improve the image. The days of the cash in hand tax dodger/dole fiddler haven't gone away but there are certainly a lot more window cleaners around now who try to give a more pro image. This has been helped by the different equipment that has become more prevalent in recent years (pure water poles gradually replacing ladders as a first port of call).
I ran a check a few years ago. About 45% of my income was cash, 52% cheques and about 3% bank transfers. Not checked recently but I would estimate that is now about 25% cash, 45% cheques and 30% bank transfers. Within 2 - 3 years I want most of the cheque payers to be on bank transfers. Not all the cheques are sent to me. A fair number are paid at the time of cleaning if a customer prefers not to pay by cash or doesn't have enough money with them.
I would be totally happy if every customer paid by bank transfer but, realistically, there will always be some cash payers.

NFH

Culex wrote: »

I expect this would not be much fun for someone with mobility challenges who, in less enlightened times, might have been termed a cripple.

Also consider the impact of giving a cheque (as opposed to an electronic payment) to someone with mobility challenges, which forces them to go to the bank. A lot of people and organisations write cheques without thinking of the consequences for the recipient. Bank transfers should be the norm.

bumpybecky

Cheques are still important for smaller groups e.g. playgroups, sports clubs, brownies etc. Payments can be made by bank transfer but often these accounts do not have internet access as they are joint signatory accounts (need at least 2 people to sign to do anything on the account). If the accounts are set up for internet banking it means one person has access to all the funds which isn't a good idea for security of the money. Having been in a group where a previous treasurer was embezzling funds, I'd not be happy signing up for online access in this situation.

NFH

bumpybecky wrote: »

Payments can be made by bank transfer but often these accounts do not have internet access as they are joint signatory accounts (need at least 2 people to sign to do anything on the account).

Before abolishing cheques, the banks will have to support the requirement for authorisation by more than one user for each outgoing payment on online banking. They already follow this principle at wholesale investment banking level in their own systems, known as "four eyes" where two employees have to authorise a payment.

ChiefGrasscutter

spenderdave wrote: »

One of the problems with on-line payments is that unless the payer puts the correct identification in the REF box it is very hard to establish where the payment has come from. One of the clubs I am associated with has over 700 members, around half of which pay their annual subs by internet transfer. Quite a number of those payments turn out to be impossible to identify, if for instance they just put 'John Smith' in the box.

Additionally my bank at least regards a payment to an existing payee BUT with a new reference Number/comment whatever as a "new mandate" requiring it to be added as a new payee with all the security authorisation processes to go with it.

So if you are put into the reference as "yr name invoice 1234" for example when you next want to pay the person/company under invoice No 1999 either you have to start again and create a new payee or worse still send the new payment which has the previous invoice No attached to it as reference: I've been on the receiving end of such confusions.

Additionally I was a treasurer for a local organisation much like the above quoted user and it was due to much of these sorts of impossible to identify payment problems and the time taken up to reconcile the mess that our attempts to go to online payments failed/was abandoned and we reverted back to cheques.

I know of course why the banks work this way....it's because some building societies use a 3rd parties as a collection account for incoming funds and use the reference field to ID the correct account number - you are told to do this when you set it up. So as far as the clearing banks are concerned a changed reference number might end up refering to in a different accounts - hence the requirement to regard it as a "new payee"

JuicyJesus

FWIW by the way, some banks are trialling dual-signatory use of Internet Banking. Once that's done that removes one of the major edge cases that keep cheques around.

Even without them there's absolutely nothing to say a transfer can't be made by writing a letter to the bank. Most banks, to my knowledge, will happily act on a signed instruction.

rb10

opinions4u wrote: »

I'm sure by 2018 somewhere close to 99% of the population would be comfortable without recourse to cheques. For anything.

Yes ... but ONLY if, starting NOW, people start 'training' others that you do not need to use a cheque to pay someone else.

I think that it is fantastic that Paulgonnabedebtfree is 'training' his customers that there IS another way to pay the window cleaner/plumber/electrician etc.

More charities and community groups need to move onto dual-auth internet banking as provided by CAF & Unity Trust. Make it expected that parents will pay for Johnny's football coaching online, and not by sending him with a cheque.

Move schools onto having online acceptance of payments via a secure website. Don't try to get children sent in to school with a cheque (to be found at the bottom of their backpack at the end of term...).

There are lots of people/organisations who manage a large number of cheque/cash payments at the moment. If they tried to move their customers onto BACS payments, then it would 'train' people into a much better way of thinking (and possibly achieve getting 99% of the population to be comfortable without cheques). In most cases, I believe it would make things much easier for the individual/organisation receiving the payments. A list of cleared payments on a statement is so much easier to monitor than a pile of cheques that all need to be carted off to the bank.

So I am saying that YES, this is possible. But we MUST start showing people NOW how there are other (generally better) methods of making payments.

NFH wrote: »

People would either hoard chequebooks in advance of a charge being introduced

You'd struggle to do this ... banks don't like customers to have too many cheque books, so if you have one book that is unused, it's unlikely that they'll give you another until you only have a few left in the original.

bumpybecky wrote: »

Cheques are still important for smaller groups e.g. playgroups, sports clubs, brownies etc. Payments can be made by bank transfer but often these accounts do not have internet access as they are joint signatory accounts (need at least 2 people to sign to do anything on the account). If the accounts are set up for internet banking it means one person has access to all the funds which isn't a good idea for security of the money. Having been in a group where a previous treasurer was embezzling funds, I'd not be happy signing up for online access in this situation.

In that case, the group needs to open an account with CAF or Unity Trust (as the Charity Commission recommends in their guidance (CC8 from memory)) which allows dual authorisation of outgoing payments. This is significantly more secure than cheques, as their is an audit log of everything that happens. How many playgroups, sports clubs and brownie packs get one signatory to pre-sign blank cheques? Cheques are an embezzler's dream.

JuicyJesus wrote: »

FWIW by the way, some banks are trialling dual-signatory use of Internet Banking. Once that's done that removes one of the major edge cases that keep cheques around.

Out of interest, which banks? I have not heard of any bank trialling this, and am very interested...

NFH

rb10 wrote: »

You'd struggle to do this ... banks don't like customers to have too many cheque books, so if you have one book that is unused, it's unlikely that they'll give you another until you only have a few left in the original.

Good point. It's so many years since I've needed to write a cheque in the UK that I can't remember how it works any more.

Culex

NFH wrote: »

Also consider the impact of giving a cheque (as opposed to an electronic payment) to someone with mobility challenges, which forces them to go to the bank.

Not at all - they would ask their carer, helper or a friend to pay in the cheque for them.

I do hope you never suffer any infirmity which limits the distance you can walk.