How stopping cheques will lead to fraud in small businesses

debsam_2

Hi,

As a small independent IT consultant, providing training to individuals, I am really concerned that the proposed cessation of cheques is going to hit my business in a big way. 90% of my customers are individuals, not businesses and, as I am training people on how to use the internet or repairing their PCs, a large proportion of them have never used on-line banking. Their preferred method of payment is cash or cheque. I don't have the wherewithal to get a credit card processor - my business is only part-time - and I don't really want to go down that route - but I CAN see that it will become very difficult for my customers to pay me in anything other than cash. And that is where my concerns comes in. Firstly, is it fair to expect customers to have large amounts of cash available because, say, my consultation took 3 hours longer than expected? If not, then am I at risk of being out of pocket, or am I expected to march customers down to the hole-in-the-wall just to make sure that they are able to pay me for services rendered? Secondly, I am a very honest business woman. Any cash I get is recorded in my books and everything is above board and declared. But how many other business people will be tempted by the flow of cash to 'forget' to declare it? The Tax Office will have kittens trying to chase up 'lost' income - and I know who will end up paying for it in the long run ... not the banks, that's for sure! Thirdly, as an honest person, not someone who buys on the black market, I ALWAYS pay for services by credit card or cheque, unless I know that my supplier is 100% scrupulous. That way I know that my payments will be going through the books. It is my little way of keeping the British tax system working the way it is supposed to. (Although as an accountant's wife, whether I believe that the current system is the best way or not is a completely different argument entirely!!) If HMRC gets enough income in, then (theoretically) all the other taxes won't be hiked to cover the losses. But I fear that once the cheque book is removed, it is tantamount to saying that cash rules for small businesses and what the eye doesn't see, HMRC won't miss.

I have discussed this with a number of my suppliers and friends who are small businesses. For example, my mobile hairdresser works 80% on cheques. My builder is concerned that his older clients will not know how to pay him. And the worries go on. I haven't seen any real opposition to the removal of cheques - no large petitions, no outcries to HMRC, no massive news articles about how this move will affect small businesses and HMRC. Martin - where are you? We need you to spearhead this and Save Our Cheques!!

What do other small business owners think of this?

Debra - The Computer Guru

chalkie99

Cheque Guarantee cards become obsolete next week so cheques are already untrustworthy anyway.

At one point you say

I don't have the wherewithal to get a credit card processor

and then

is it fair to expect customers to have large amounts of cash available because, say, my consultation took 3 hours longer than expected?

Surely if your customers need large amounts of cash you can afford the card acceptance costs?

I think anyone who takes cheques from any other than established credit checked customers is taking a huge risk already and most people want to pay by card.

Appreciate your viewpoint but think you are in a losing battle.

Annisele

I think that you've already lost the battle.

Page 5 of the Payments Council's fact sheet shows that cheques are a tiny proportion of retail spending. I can see that a tiny proportion overall might hide a large number of cheques being used in particular businesses, or by particular sectors of the community - but it's unlikely to be worthwhile for banks to continue to support cheques given the decline in usage.

Out of curiosity I've just looked in my cheque book - I've issued nine cheques in the last six years, and most of them were to places like the Passport Agency and DVLA. I'm a card payment person!

gibbyni

I would look into just doing bank transfer payments, or a way to take cards. Im the same as Annisele I pay all my suppliers this way, and come to think of it im not even sure where my cheque book is hhhhhhhmmmmm. As for payments out of about 1000 individual sales last year we took about 5 cheques. Our Customers are young and old but we have forun they dont have a problem with online payments.

In saying that I can see your point but it just one of these things and we have to change with the times.

Premier_2

Have I missed something?

Cheque guarantee cards are being phased out ... but that won't affect you
(Cheque guarantee cards could only be used in face to face transactions)

Cheques themselves I know nothing about being phased out, other than 2 years ago they suggested they would look to do so by 2018 ... but only if a suitable alternative could be developed. I think you are suggesting that has not yet happened

Edit: looks like this is still the case - this report from the BBC within the last few days

...
The UK Payments Council is planning to phase out cheques by 2018, but only if viable alternatives are found....

RBS recently said it would not phase out cheques unless customers accepted their demise.

http://www.bbc.co.uk/news/business-13781682

s_b

i pay by cheque still for most things
i have one company i have a weekly account with and they dont take cheques and i cant pay by debit card either (its a largeish private owned business ) i try not to use them if i can because they want cash,its their loss because my other accounts happily take weekly cheques
i cant really see in the short term any other way round the situation because i am not a debit card lover and i treat my company credit card to preferred trusted companies only

moneypooh

Surely you have been taking cheques without guaranetee anyway as the amounts would have exceeded their guarantee level provided by the card? Not many guarantee over £100. I only say this as you hint that the cash sums would be large.
You could ask people to use paypal if they and you had an account.

Savvy_Sue

I read an article the other day stating that cheques wouldn't be phased out until a viable 'paper-based' alternative system was in place.

Still trying to work out what that could look like, other than - oh, I know, A CHEQUE!

Or will we be back to Postal Orders?

Or folding cash?

Neither of which look quite like cheques to me ...

As a growing charity, it's going to be a concern at work. We don't take card payments, but I can see it coming.