BUSINESS
Phasing out of cheques can be
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THE DECISION of the Payments Council to phase
increasingly expensive option for businesses and that,
out cheques by 2018 may not be bad news for small
as it declines, the banks will impose ever-greater costs
firms, a leading business group has claimed.
on the firms that continue to accept and sign cheques.
The Payments Council, a panel of banking representa-
Mr Goodman went on to say: ‘It would be easy
tives, voted to end the 350-year-old span of the
simply to criticise the Payments Council’s decision.
cheque by October 2018.
Instead, we are taking a pragmatic approach based on
The cost to the banks of processing cheques is four
the reality for small businesses.
times higher than that for electronic methods of pay-
‘We believe that the better option is to use the public-
ment.
ity this issue has generated to pressure the banks into
Despite the fact that some four million cheques are
coming up with practical, convenient and cost-efficient
written every day, their use has been falling over the
alternatives to the cheque – a ‘third way’ which will
years.
benefit all parties concerned.’
That said, concerns have been voiced that the move
He pointed to the possibility of a paper-based pay-
could harm many smaller firms that traditionally
ment system, which will be little different from the
depend on customers paying by cheque.
cheque in practice but will cut out the expensive and
However, the Forum of Private Business (FPB) has
time-consuming clearing process.
come out in favour of the decision, arguing that the
Mr Goodman concluded: ‘The Payments Council
process could be ‘painless’ provided that the banks
has said it will only take a final decision to phase out
introduce a simple and convenient alternative.
cheques in 2016 if it is satisfied the banks have put
Matthew Goodman, the FPB’s policy representa-
viable alternatives in place. We will be working with
tive, said that, although half of the business group’s
them, and our members, to make sure this is the
members use cheques, the method is becoming an
case.’
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