MSE News: MPs call for return of cheque guarantee cards

NFH

James wrote: »

Why remove a payment system that still suits a large number of individuals?

If these individuals want to continue using this costly and archaic payment system, then they should pay the costs of operating it. Perhaps a £10 annual fee for a cheque guarantee card and £1 per cheque written and £1 per cheque deposited would be appropriate.

It is absurd, for example, that most UK banks charge £6 for an incoming SEPA payment but zero for an incoming cheque. In most European countries, electronic incoming payments are free and paper-based incoming payments are charged. The charges in the UK are illogical and bear no resemblance to cost.

tagq2

NFH wrote: »

Perhaps a £10 annual fee for a cheque guarantee card and £1 per cheque written and £1 per cheque deposited would be appropriate.

Banks already charge businesses to write and deposit cheques. It would be cheaper and quicker for the businesses who take up your incredibly valuable time to simply perform an electronic transfer except that a mistake by either customer or business means the money is likely lost whereas with a cheque they'd have to (i) write wrong name; (ii) write corresponding wrong address; (iii) send to dishonest receiver who actively deposits cheque; and (iv) not spot mistake and stop in time.

Now transcribing a sequence of 14 unchecksummed numbers wrongly is very easy - plus 18 alphanumeric characters if reference needed making for a string of up to thirty-two numbers and letters to get right. Watching someone pay you with their online banking is also no confirmation of anything unless the receiver can check their account and find the money being deposited immediately. Put it another way: why do you think Tesco don't allow you to pay for stuff at the cash register by FPing into their account?

It is absurd, for example, that most UK banks charge £6 for an incoming SEPA payment

To and from what currency would that be?

but zero for an incoming cheque.

UK tradition is to charge nothing for domestic personal banking services providing you don't go into unauthorised overdraft. It's not specifically about annoying you with cheques and if cheques are abandoned it won't mean suddenly not charging for you for other stuff you think should be free.

NFH

tagq2 wrote: »

Banks already charge businesses to write and deposit cheques.

Yes, that's well known, but I'm advocating that personal customers should be charged similarly.

tagq2 wrote: »

To and from what currency would that be?

EUR of course. However, before you argue that the UK being outside the Eurozone is any justification for levying such a hefty charge for incoming SEPA payments, look at other European countries that are likewise outside the Eurozone. Take Switzerland, for example, which is not only outside the Eurozone, but outside the EU as well. Of the two largest Swiss banks (which charge the most), UBS charges CHF 0.30 for a outgoing SEPA payment, and Credit Suisse charges zero. Neither bank charges anything for incoming SEPA payments. It's a similar story in other European non-Eurozone countries.

JuicyJesus

A_Flock_Of_Sheep wrote: »

I don't know whay people are so down on cheques.

At the end of the day if you choose not to use them - fine. That's up to you. If you prefer to use a Debit Card or BACS that is your choice. It is all about personal choice at the end of the day and people shouldn't really slag off people's choice. People choose Vauxhall cars, Ford Cars, Large Cars, Small Cars at the end of the day they all do the same thing. At the end of the day cards, cheques, cash all do the same thing. They pay people.

Your attitude however is one of "cheques are wonderful, I love cheques, everyone should use them and the banks and retailers should accede to my whims and I don't want to pay a penny for it". This is a nonsense.

You suggest banks should go back to uncrossed cheques that you can cash anywhere. Do you realise how much fraudulent activity that would allow? Do you realise that that alone is a good reason why that will never be reintroduced? Banks have no coherent reason to want to reintroduce a product - uncrossed cheques, cheque guarantee cards - that will overall lose them money in fraud, bad debt and processing costs. Are you willing to pay to have your precious cheque guarantee card back and write all your cheques? Or are you just moaning and expect everyone else to bear these substantial costs just so you can feel special and old-fashioned?

tagq2

JuicyJesus wrote: »

Are you willing to pay to have your precious cheque guarantee card back and write all your cheques? Or are you just moaning and expect everyone else to bear these substantial costs just so you can feel special and old-fashioned?

The business is already paying to deposit the CGC-guaranteed cheque. This is reflected in higher prices. While you're here you might also want to tell small businesses to stop taking debit cards for small value items but encourage them for large value items. And no credit cards above £100 because that pesky CCA will make chargebacks more likely. But big businesses should stop taking cash because they'll get better deals from electronic payment methods.

Or just accept that you're not going to be charged precisely what you cost plus some fixed profit because that's never how business works: cost is a fact, pricing is a policy.

IIRC from Payments Council figures, half a billion cheques were written in 2009. And over 40% of all financial transactions by value were by cheque. But just £30 million was lost to successful cheque fraud, rendering card fraud hilarious.

2sides2everystory

Now that is telling it how it should be told, tagq2.

If only there was a way to help the special old-fashioned citizens amongst us - oh yes, there already is, a full reinstatement of the Cheque Guarantee scheme. But then there will always be some other 'special' people with an abundant sense of the importance of their banking apologist views who wish it to be known that abdicating responsibility for provision of special old-fashioned customer service is for the greater good and anything against the all-knowing retail banking industry grain is nonsense.

PS I heard a Radio 4 interview of the current Chief Exec of Retail Banking at RBS yesterday. He's very much someone we don't need. He is so steeped in the inadequacy of his own experience that he thinks fee-free personal banking in the UK was a marketing ploy gone wrong. In his American accent he was extolling the virtues of some Australian model. I say he landed on the wrong island this time.

JuicyJesus

tagq2 wrote: »

The business is already paying to deposit the CGC-guaranteed cheque. This is reflected in higher prices. While you're here you might also want to tell small businesses to stop taking debit cards for small value items but encourage them for large value items. And no credit cards above £100 because that pesky CCA will make chargebacks more likely. But big businesses should stop taking cash because they'll get better deals from electronic payment methods.

Some businesses already refuse to accept cash or charge a higher price for cash transactions. Carphone Warehouse for one. Debit card payments are charged at a flat fee for each payment, unlike cash, and are paid in as cleared funds faster than a cheque and at lower cost. They also offer cashback, which can reduce the overall cash charges for a business (more cash given to customers = less cash paid into the bank = fewer charges). Chargebacks are relatively unlikely for face-to-face purchases, which is the only realm where guaranteed cheques have any relevance anyway.

Meanwhile, with a CGC, the bank has to issue cheque books, issue guarantee cards, bear the cost of any fraud or bad debt created through their (mis)use, and spend time and effort chasing customers and recovering cheque guarantee cards if such fraud/bad debt happens. If a personal customer insists on using a method which incurs all of these costs to them, I see no reason why they should not pay for such a facility. A debit card can be declined; a guaranteed cheque can't. Cash can be refused to be dispensed; a guaranteed cheque can't. A credit card can be stopped and is subject to a spending limit; a guaranteed cheque with a sufficient number of available cheques can't.

But you don't want to bear these costs. You want your archaic, fraud-prone, expensive system to be provided to you for free on the specious grounds that because the business pays 20p or so to deposit a cheque that's all it will ever cost. Banks have good reasons for stopping issuing CGCs and retailers have good reasons for not accepting them; both have no good reasons to reintroduce them or accept them again. You, meanwhile have "I want them, for free". "I want them, for free" isn't good enough in the face of sound business reasons.

Or just accept that you're not going to be charged precisely what you cost plus some fixed profit because that's never how business works: cost is a fact, pricing is a policy.

Cost is a fact. The costs have been outlined. The pricing should reflect that cost, especially when that cost is incurred for no actual benefit to the bank or the retailer. You yourself quote a figure of "only" £30million. That's £30million a year chucked into fraudsters' pockets that has now been saved. Is this not a good thing? Or should they continue to pay £30million a year so people can continue being proud of being "old-fashioned"?

By the way, those billions of transactions? What percentage of those was guaranteed? Do you even know? How many of them were dividend cheques for less than a fiver? How much of that £30mill was guaranteed?

2sides2everystory wrote:

If only there was a way to help the special old-fashioned citizens amongst us - oh yes, there already is, a full reinstatement of the Cheque Guarantee scheme. But then there will always be some other 'special' people with an abundant sense of the importance of their banking apologist views who wish it to be known that abdicating responsibility for provision of special old-fashioned customer service is for the greater good and anything against the all-knowing retail banking industry grain is nonsense.

Or the old-fashioned citizens could adapt. Or if they really want or need to sign rather than use a PIN, get CHIP-and-signature cards, which are freely available.

I fail to see how a cheque guarantee scheme somehow guarantees "old-fashioned customer service" anyway, other than that CGCs are old-fashioned and it's a service provided to the customer. Funny enough, banks don't store customers' accounts in big books with wooden covers any more, and you don't have to visit your account holding branch to conduct any sort of out-of-the-ordinary transactions either. Or should we go back to that too in the name of being "old-fashioned" (as if that's such a good thing...)

But then if banks started offering free chocolate and kittens to everyone you'd complain that it wasn't Cadbury's and the kittens were the wrong colour.

NFH

Perhaps we should have a government stamp duty on cheques, maybe £1 each, to discourage their use and to cover the environmental impact of this wasteful and unnecessary use of paper. Also payment envelopes enclosed with paper bills should be banned too.

Ireland already has such a tax on plastic debit and credit cards, so it's not as far-fetched as it might first sound.

JuicyJesus

NFH wrote: »

Perhaps we should have a government stamp duty on cheques, maybe £1 each, to discourage their use and to cover the environmental impact of this wasteful and unnecessary use of paper. Also payment envelopes enclosed with paper bills should be banned too.

Ireland already has such a tax on plastic debit and credit cards, so it's not as far-fetched as it might first sound.

There once was a stamp duty on cheques, believe it or not. It was abolished in 1971: http://boards.fool.co.uk/stamp-duty-on-bank-cheques-8303989.aspx?sort=whole

Many companies already don't include envelopes with their bills any more. Creation don't, for a start. It actually annoys me when companies do, since it means I have to bother sorting them out and then chucking them in my recycling - I have no need for them since I pay everything by standing order, FPS or Direct Debit.

I can't say I'd support an Ireland-style debit/credit card tax... it's 100 euros a year there! Imagine the outcry though if it did get implemented and all those people on here with 20 different current accounts at once got charged £2000 a year... that'd be an entertaining week to be on MSE

NFH

JuicyJesus wrote: »

I can't say I'd support an Ireland-style debit/credit card tax... it's 100 euros a year there!

No, it's not as much as that! According to Wikipedia, it's €30/year on credit and charge card accounts and €5/year on combined cash/debit cards. I agree with you in opposing such a tax on cards, but what I hadn't realised is that Ireland has a €0.50 stamp duty on cheques. The latter is what we need in the UK.