MSE News: Treasury Committee to reopen cheques enquiry

Milarky

What banks need to do is improve all the alternatives too - it's not enough just to withdraw cheques.

Online banking is distinctly variable I find. For instance

First Direct: set up and pay? [yes] delete a payee? [no!] modify a description? [Only by phoning them and they put 'do not use' on the front end!] change anything else? [forget it]

Nationwide: set up and pay? [yes] delete a payee? [Yes] modify a description? [Yes] change anything else? [Yes: they allow you reinstate an old payee and modify an existing 'reference' too - but you can't change the payee's actual account number or sort code in cases where the payee notifies you of a change of bank]

Halifax [part of LBG]: set up and pay? [yes] delete a payee? [Yes] modify a description? [Yes] change anything else? [Yes: they allow you reinstate an old payee too - and you can change the payee's actual account number or sort code as well as the 'reference']

Lloyds [other part of LBG]: set up and pay? [yes] delete a payee? [Yes] modify a description? [No!] change anything else? [forget it!]

I suspect that Halifax's incorporation into Lloyds will mean its 'good bits' actually disappear and customers will then find it more difficult to set up and modify their lists of payees

First Direct's online banking is frankly a joke in this regard and stands in contrast to their high reputation for 'customer service'

What this shows, I think, is that banks urgently need harmonise their online standards - which would include commonality in the treatment and processing of payee details. For instance, some banks 'allow' you to include a 'reference' whilst others actually insist that you do. You then go to the actual receiving bank (ie when paying yourself) and some do show the 'reference' information you painfully provided and others don't.

Paulgonnabedebtfree

Milarky wrote: »

What banks need to do is improve all the alternatives too - it's not enough just to withdraw cheques.

Online banking is distinctly variable I find. For instance

First Direct: set up and pay? [yes] delete a payee? [no!] modify a description? [Only by phoning them and they put 'do not use' on the front end!] change anything else? [forget it]

Nationwide: set up and pay? [yes] delete a payee? [Yes] modify a description? [Yes] change anything else? [Yes: they allow you reinstate an old payee and modify an existing 'reference' too - but you can't change the payee's actual account number or sort code in cases where the payee notifies you of a change of bank]

Halifax [part of LBG]: set up and pay? [yes] delete a payee? [Yes] modify a description? [Yes] change anything else? [Yes: they allow you reinstate an old payee too - and you can change the payee's actual account number or sort code as well as the 'reference']

Lloyds [other part of LBG]: set up and pay? [yes] delete a payee? [Yes] modify a description? [No!] change anything else? [forget it!]

I suspect that Halifax's incorporation into Lloyds will mean its 'good bits' actually disappear and customers will then find it more difficult to set up and modify their lists of payees

First Direct's online banking is frankly a joke in this regard and stands in contrast to their high reputation for 'customer service'

What this shows, I think, is that banks urgently need harmonise their online standards - which would include commonality in the treatment and processing of payee details. For instance, some banks 'allow' you to include a 'reference' whilst others actually insist that you do. You then go to the actual receiving bank (ie when paying yourself) and some do show the 'reference' information you painfully provided and others don't.

Indeed some harmony between the banks would be helpful.
I do see why some don't allow a payee's details to be changed though. I believe it's a security measure. If someone gained access to your log-in details online (e.g. via a keystroke recorder trojan), your account would be wide open for any payee to have their details altered to those of the fraudster. Far better to force the entire bill payment to be set up from scratch and then require the account holder to verify the new payee independently (e.g. confirming a randomly generated password sent by text). The banks have become a lot more pro-active to prevent fraud. Unfortunately this sometimes causes a bit more inconvenience to genuine customers. I would like to think that they would have been this pro-active if the customer bore the losses. I very much doubt it though.

Ben84

NFH wrote: »

"In particular, pensioners who are less comfortable with the internet still rely on them" - what about telephone banking if they're not happy with the internet? I don't see why an expensive clearing system should be maintained for a stubborn minority who refuse to use telephone banking or internet banking.

While the future of how we spend money is almost certainly electronic, I suspect within my lifetime even paper and coins are likely to go out of use, I'm not sure cheques are past being useful just yet.

I'd like to use electronic for everything, from buying stuff at the car boot to bus fares and picking up a few items at the local shop. It could be done with modern technology, London for example has the Oyster system for public transport. Sooner or later it's all going to come together in some new system, but at the moment the way we spend money is all a bit disjointed and relies on a range of technologies that go from ancient (coins) to fairly modern (plastic cards) and cheques are still useful sometimes. I can't readily think of alternatives for these uses at the moment, so either there isn't another straightforward option or the public awareness of them may be lacking. Either are good reasons to reconsider getting rid of them at the moment.

Hiram

A few things about cheques from a parenting point of view. When they are scrapped altogether, I haven’t managed to figure out what parents will do. For example one School in my town has a policy which insists that any amounts payable to school over £3 must be paid by cheque.
I’ve had a look at my usage of cheques and they are nearly all used these days to pay for school items and I don’t want my children carrying large amounts of cash into school. My eldest was asked to take in £20 on the first day of term for his school. Naturally, I paid by cheque. Lunch monies have to either be cash or cheques to our local County Council which is an huge organisation, we have never been offered an alternative method of payment. Until we are offered alternatives, I do not think we should be scrapping cheques. I would happily use online banking to pay.


Many small businesss like hairdressers in my town and beauticians in a nearby town will not accept cards. They do not have card machines as they say the cost of having one is too high. My local garage have installed one and now pass on the cost of paying by credit card of 2.5% to the customer, which I hate and have considered taking my business elsewhere. I pay for horse riding lessons by cheque. There is no option other than cash to pay otherwise at the riding school, a small business. Scouts have £30 per term and other camping monies. I refuse to pay by cash as I can prove I have paid and my child cannot lose it. It should be noted that once the Scout leader lost my cheque and found it about ten months later, he then altered the date and claimed he didn't realise it was a crime to do so! Until organisations start giving us another option then cheques are the most convenient way of paying.


The other area where we use a lot of cheques is for sports events. My husband runs and competes in many events. Take away cheques and how can you pay by post for an event? Will small events not occur? Paying by cash on the day is not an option due to the huge number of folks taking part e.g. 500 runners and cash only would be great for robbers to know where and when an event is taking place. You could end up with large London marathon type events, where folks give credit/debit numbers beforehand, taking place only. How sad. The decline of local society events.

Something needs to be done to make it cheaper for small businesses to have the machines.
Remove the necessity for small businesses/schools to put a limit on transactions under £10, which I often see.
Schools will need more clerical staff if all parents have to go into school to pay by card. How will parents go into school when they are out at work? Perhaps a schools top-up card might be appropriate where parents can have money deducted for items. However, I’d rather have the money sitting in my bank account. Earning interest if it was a decent rate. Organisations need to develop systems to encourage usage of bank transfers.


More thought needs to go into this first. There is currently no option for me to pay the riding school, beautician, schools or county council other than by cash when cheques are scrapped and I think the technology to pay e.g. by mobile phone or on-line/telephone banking should be there, in place first, for society to get used to it. Currently I debit a small amount of cash per week from my current account and pay for everything by card otherwise. I will need a much larger amount of cash to cover weekly activites.



I can see why they want to remove cheques, however, more thought needs to go into this first.

Lots to think about and for a starter, I'm going to write to my local Scout group and see if they will increase their choice of payment methods.:A


Hiram

rb10

Hiram, some good points made there - as well as a few that I disagree with

Hiram wrote: »

A few things about cheques from a parenting point of view. When they are scrapped altogether, I haven’t managed to figure out what parents will do. For example one School in my town has a policy which insists that any amounts payable to school over £3 must be paid by cheque.

I’ve had a look at my usage of cheques and they are nearly all used these days to pay for school items and I don’t want my children carrying large amounts of cash into school. My eldest was asked to take in £20 on the first day of term for his school. Naturally, I paid by cheque. Lunch monies have to either be cash or cheques to our local County Council which is an huge organisation, we have never been offered an alternative method of payment. Until we are offered alternatives, I do not think we should be scrapping cheques. I would happily use online banking to pay.

Many schools are already adopting a 'cashless' system, whereby each child has a card (either with an RFID chip, a barcode, or a magnetic stripe). This card is then used for payment of school dinners, library fines, school trips, music tuition etc. Parents can log on to a secure website where they can top-up the card and/or pay for items directly. See here for one company that provides this system to schools. The technology is here, it just requires those in charge to do something about it. In the long term, I reckon it'll save them time and money - I do not envy schools that have to collect several hundred cheques from children to pay for a school trip.

Hiram wrote: »

Many small businesss like hairdressers in my town and beauticians in a nearby town will not accept cards. They do not have card machines as they say the cost of having one is too high. My local garage have installed one and now pass on the cost of paying by credit card of 2.5% to the customer, which I hate and have considered taking my business elsewhere. I pay for horse riding lessons by cheque. There is no option other than cash to pay otherwise at the riding school, a small business.

For many small businesses (regardless of what they may claim), it is actually cheaper for them to take card payments than cash/cheque. Most businesses will have to pay to deposit cash/cheques into their bank account, then there's the additional cost of storing and transporting cash securely.

However, I do agree that banks should make it cheaper for small businesses to have card machines.

Hiram wrote: »

Scouts have £30 per term and other camping monies. I refuse to pay by cash as I can prove I have paid and my child cannot lose it. It should be noted that once the Scout leader lost my cheque and found it about ten months later, he then altered the date and claimed he didn't realise it was a crime to do so!

They don't realise that it would make their lives so much easier to open an account with CAF Bank or Unity Trust Bank, which would allow them to have online access. Then you could just make an online transfer to their account for the payment, and they could check that it's arrived using internet banking. No need for them to waste time at the start of their meeting collecting cash and cheques, and then proceeding to lose them!

Hiram wrote: »

The other area where we use a lot of cheques is for sports events. My husband runs and competes in many events. Take away cheques and how can you pay by post for an event? Will small events not occur? Paying by cash on the day is not an option due to the huge number of folks taking part e.g. 500 runners and cash only would be great for robbers to know where and when an event is taking place. You could end up with large London marathon type events, where folks give credit/debit numbers beforehand, taking place only. How sad. The decline of local society events.

For the small events, like with Scouts, there is no reason why they could not use online banking. Each runner just makes a payment to a set account - putting a unique ID number as the payment reference.

Unfortunately, so many people are so set in their ways, that until they are forced to use another method of making/accepting payments, they will just not consider another way.

As someone who collects around 15-20 small payments from people on behalf of an organisation, around 8 times a year, I cannot begin to say how much easier it is to just tick off names when they appear on the bank statement than to match names with cheques and cash payments.

Hiram wrote: »

Something needs to be done to make it cheaper for small businesses to have the machines.

Agree 100% - this comes down to the banks.

Hiram wrote: »

Schools will need more clerical staff if all parents have to go into school to pay by card. How will parents go into school when they are out at work?

Online payment systems, as above. Should in fact require less clerical staff, since the payment system can be set up to automatically produce a list of those who have paid.

Hiram wrote: »

More thought needs to go into this first. There is currently no option for me to pay the riding school, beautician, schools or county council other than by cash when cheques are scrapped and I think the technology to pay e.g. by mobile phone or on-line/telephone banking should be there, in place first, for society to get used to it. Currently I debit a small amount of cash per week from my current account and pay for everything by card otherwise. I will need a much larger amount of cash to cover weekly activites.

The technology is there ... the big challenge is getting people to embrace it. Most people are reluctant to change.

They have their own system, which, admittedly works. Collecting hundreds of cheques and ten pound notes from school children certainly gets the school their money. But those in charge fail to realise that they could do the same in a far more efficient and cost-effective manner.

When cheques are withdrawn, people will be forced to use these more efficient processes. Until then, however, it's only going to be a small number of forward-thinking organisations that make these changes.

Chippy1975

NFH wrote: »

A more workable approach would be to charge £1 per cheque, representing the true cost of processing a cheque, perhaps split as 50p per cheque paid and 50p per cheque deposited, which would discourage people from asking for cheques as well as writing them.

As usual the statement 'encourage/discourage' is used when attempting to take something out of use. How voluntary is not being able to pay at most big stores/garages and almost anywhere by cheque, but we still have them, so banks force the business community to deny us the use of them by adding fees to bank and handle them, thats not encouraging, its by stealth.

As a tradesmen with both commercial and householder clients, all my invoices have a sort-code and account number on them, just the same as most of my suppliers supply. I get paid through BACS, I pay via BACS. Simple, I get funds within hours, so do my suppliers, no banking or really encouragable minimal fees for this sort of transfer of funds, no paper to travel around. A cheque actually has far more detail on them, even more when you get to see the former guarrantee card. When paying through cards how do we know has not been swiped to copy the numbers?

Problem I do have with small cheque amounts, look at an aside from work income, amateur/hobbyists sell a few items by post, not talking about internet sales where you can use the likes of PayPal and Nochex, most elderly and some who have no capability coping with the internet or computers just pay by cheque, but frequent little cheques like say £3-£5 cost upwards of 30p-95p to bank each, at one time it was one fee per bundle, (Alliance&Leicester BA), so for those many home hobbyists, should they be forced to pay £20 a month for the use of card machines, likewise tradesmen taking them to every small job going, and all those little second-hand dealer shops, hairdressers/barbers, and we know whose going to be making more money, the banks! Hence why signs say the customer pays the bank fee by using cards under £10, otherwise there is no gain for the seller.

Banks having it thier way, cash will be next using these swipe cards for your daily newspaper.
I wonder about walking down the street with a scanner and taking 30p off every passer by, swiping the wallets, just like the current adverts show, how would you know?

Chippy1975

rb10 wrote: »

For many small businesses (regardless of what they may claim), it is actually cheaper for them to take card payments than cash/cheque. Most businesses will have to pay to deposit cash/cheques into their bank account, then there's the additional cost of storing and transporting cash securely.

However, I do agree that banks should make it cheaper for small businesses to have card machines.

Why assume we need to bank the cash? Until that is also done away with, use it to pay for things instead of paying to bank it & 'write a cheque' or whatever, corner grocer shops cash I know is not banked, it pays the wholesaler on the next days purchases restock.

How about monthly hobby sales, say 10 cheques a month, postal sales off classified listings, (not internet based), at an average of £4, fee averaged out at 50p per cheque, if using a business account, after bank fees of £5 is £35.

However consider the other option, card machine costing £20 per month, take 3.4% on a low turnover fee, out of that £40 comes a hefty charge of £23.36

Business accounts often charge a monthly account fee of say £5 or more too, although you could say other cash event sales and/or internet sales would subsidise the account monthly fee and the card machine fee. Those online merchant fees apart from the highest 3.4% also take a flat rate on every purchase too.
To quote paypal =1.4% to 3.4% + £0.20 GBP got to be similar with the card machines fee structure.

JuicyJesus

Chippy1975 wrote: »

Why assume we need to bank the cash? Until that is also done away with, use it to pay for things instead of paying to bank it & 'write a cheque' or whatever, corner grocer shops cash I know is not banked, it pays the wholesaler on the next days purchases restock.

This works wonderfully until the grocer needs lending or assistance from his bank and they won't do anything because his turnover looks so low as he never banks any money.

It's not really a charge dodge anyway. More of a tax dodge.

How about monthly hobby sales, say 10 cheques a month, postal sales off classified listings, (not internet based), at an average of £4, fee averaged out at 50p per cheque, if using a business account, after bank fees of £5 is £35.

Most banks charge about 30p for a credited cheque, so that'd be about £3. A Faster Payment, on the other hand, might be free of charge.

We have had posters on here say that after stopping taking cheques, having the card machine has actually saved them money - since one bounced cheque equals many times the cost of the card machine. It's a factor many seem to ignore; not to mention the hassle of actually getting the cheques into the bank.

Chippy1975

JuicyJesus wrote: »

This works wonderfully until the grocer needs lending or assistance from his bank and they won't do anything because his turnover looks so low as he never banks any money.

It's not really a charge dodge anyway. More of a tax dodge.

Most banks charge about 30p for a credited cheque, so that'd be about £3. A Faster Payment, on the other hand, might be free of charge.

We have had posters on here say that after stopping taking cheques, having the card machine has actually saved them money - since one bounced cheque equals many times the cost of the card machine. It's a factor many seem to ignore; not to mention the hassle of actually getting the cheques into the bank.

30p per cheque, but I have just been looking into the other charges, a flat fee per month (A&L/Sant LTSB) or quarter (Barclays) to factor in for a hobby account to switch, there is also a fee to make a slip of paper deposit that goes with the cheques, theres more to it than JUST the 30p. You dont say how the postal customers will want to send me the card details in the post as a 'customer not present'.
When we were retailers we could do that but those sales were restricted to a maximum of £25 and needed verification by phone. Thats when they hit us with a withdrawel of the card rollover machine and a £19.95 flat rate card machine, and for the small second-hand shop we ran it was then not worth it for the few using cards. My main income as I said is 90% paid by BACS.

As for the denengenious remark about tax avoidance, thats the trouble with cash based business, do you consider that the high majority of small shopkeepers that take mainly cash for the loaf, milk and paper are avoiding tax? Come now, what about the accounts that are paid for in cash at the wholesaler, it itemises all what they have to pay for, all the shopkeepers details, and you cannot pay cash at wholesalers without an account. Ive been there helping out in the heavy snow flurrries and see most of them do the same, besides a store pays for coins so why be charged to bank it twice!

I suppose tradesmen taking cash for work is also assumed to be an avoidence of tax, but no one should treat everyone the same, cash is the most guarranteed way to get paid on the spot, no bounces or chargebacks possible. For tax avoidance look at the big companies with offshore accounts with clever accountants!

opinions4u

cash is the most guarranteed way to get paid on the spot, no bounces or chargebacks possible

Forged notes are a swine though.