Cheques to be phased out by 2018

Some 350 years after one Nicholas Van Acker changed banking history by wielding his quill and writing on an oblong-shaped piece of paper an order to pay a Mr Delboe £400, the death knell was today sounded on the great monetary institution that is the cheque.

The body that oversees the strategy for making payments in the United Kingdom announced that cheques, which are still written at a rate of 3.8 million per day, will be phased out of use by 2018.

The Payments Council said the move, which will save the banking industry nearly £600m per year, was necessary after a steep decline in cheque usage since its peak in 1990, when 10.9m cheques were written each day.

A succession of retailers, including all UK-wide supermarket chains along with most petrol stations and high street stores, have stop accepting cheques because of their high processing cost compared to debit cards.

Cheques cost around £1 per transaction to produce and process, compared to the 15 million daily debit card payments which cost less than half that amount. Cheque use has declined 40 per cent in the last five years. They are now used in just 3 per cent of retail transactions but cost £1.4bn a year to process. By 2018, the annual cost will have fallen to about £580m.

The Payments Council, which is funded by the banking industry and organisations responsible for money transfer systems, it making the announcement to ensure that a viable replacement to cheques had been introduced by 2018. The decision will be reviewed in 2016 before a final go-ahead to shut down the cheque clearing system is given.

Paul Smee, the council’s chief executive, said: “There are many more efficient ways of making payments than by paper in the 21st century, and the time is ripe for the economy as a whole to reap the benefits of its replacement.

“Customers aren’t likely to see any immediate change as the target date is still a long way off. This announcement marks the start of extensive work that we need to do to ensure that everyone has a viable alternative.”

Since the first British cheque was written by Mr Van Acker on 16 February 1659, most inside the banking industry agree that cheques, a method of payment that dates back to the Roman Empire, are in terminal decline, the announcement of a compulsory end to their use provoked unease among groups that remain reliant on their use.

The elderly remain the heaviest users of cheques, in particular to receive sums of money. While the average 25-year-old will receive two cheques a year, those over 65 will get four. More than half of adults, some 54 per cent, still write cheques.

Andrew Harrop, head of public policy for Age Concern and Help the Aged, said: “Many older people rely on cheques as their main form of payment and will be very worried about how they will manage if they are withdrawn.

“Our fear is that setting a date will give the green light to banks and retailers to withdraw cheques even earlier than 2018, as some already have.”

Banking industry insiders said alternative methods already existed for making the payments where cheques are currently preferred, such as for homeowners paying tradesmen or parents paying for school meals.

A source said: “Everyone knows cheques and is used to them but we are talking about a 300-year-old technology. This will be as much about raising awareness of existing alternatives as finding new methods.”

The number of “Faster Payment” direct transfers between bank accounts, where money can be sent instantly using a recipient’s account number and sort code, now runs at one million per day.

Postal orders remain popular

While cheques may be going the way of gold sovereigns as a way of paying for everyday goods, the Post Office postal order remains in rude health.

The Royal Mail said today that while the quantity of postal orders being bought has remained steady, the overall value of sales has risen considerably in recent years.

The Post Office, which will not disclose the total value of postal order transactions, is considering a campaign to try to widen the use of postal orders, which unlike cash sent in the mail can be cancelled automatically and the money refunded to the sender.

A Royal Mail spokesman said: "There has been a sigificant increase in the values of the postal orders we are selling. They remain very popular and we certainly have no plans to discontinue them. Indeed, we are looking to increase their use."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

election 2015The 10 best quotes of the campaign
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Guru Careers: Management Accountant

    £27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

    Guru Careers: Project Manager / Business Analyst

    £40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

    Day In a Page

    General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

    'We will not sit down with Nicola Sturgeon'

    In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
    VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

    How ordinary Britons celebrated VE Day

    Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
    They came in with William Caxton's printing press, but typefaces still matter in the digital age

    Typefaces still matter in the digital age

    A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
    Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

    'Missing link' between Earth's two life-forms found

    New microbial species tells us something about our dark past, say scientists
    The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

    Pan Am Experience: A 'flight' back to the 70s

    Tim Walker checks in and checks out a four-hour journey with a difference
    Humans aren't alone in indulging in politics - it's everywhere in the animal world

    Humans aren't alone in indulging in politics

    Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
    Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

    Crisp sales are in decline

    As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
    Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

    Ronald McDonald the muse

    A new wave of artists is taking inspiration from the fast food chain
    13 best picnic blankets

    13 best picnic blankets

    Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
    Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

    Barcelona vs Bayern Munich player ratings

    Lionel Messi scores twice - but does he score highest in our ratings?
    Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

    Explosive batsman who sets the range for Kiwis' big guns

    Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'