Is the humble cheque set to be terminated?
Despite opposition from small businesses and consumer groups, UK banks are set to vote next week on the possible abolition of cheques as a method of payment in the UK. While this has been an ongoing situation for some time, there are still around 3.8 million cheques written every day in the UK although this number has fallen by 66% over the last 20 years. So why are the UK banks looking to abolish cheques?
As you might have guessed, the most significant element in the ongoing fight to kill off the humble cheque is the cost of processing a cheque payment. Information from the banking community suggests it is four times more expensive to process a cheque than it is an electronic transfer. It looks as though cheque guarantee cards could also be scrapped, possibly by June 2011, and actual cheques could become defunct by 2018. So what are the options going forward?
More and more people will now need to move towards direct debits to cover their monthly payments to the likes of electricity, water and gas companies but there are concerns about historic errors with regards to this payment method. Many consumers have been affected by errors with direct debits and a growing number would be firmly against paying their regular bills via this method.
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