The demise of the cheque?

It’s old news that in July 2011 the Payments Council announced it was ending its search for a replacement for cheques and that they would continue to be part of the payments system for the foreseeable future.

A decline on previous years, but still an impressive 718 million payments were made by UK consumers and businesses in 2013 totalling £535.5 billion worth of payments.

The main reasons for the decline in the use of cheques has been the rise of electronic alternative payments.

But could there be a strong upsurge of cheque usage with the photo cheque revolution?

Mobile cheque imaging

A potential technical enhancement of cheque usage was announced by the Government in January 2014 which would combine smartphone technology with one of the earliest forms of paper money transfers – the earliest handwritten cheque known to be in existence in the UK was written in 1659, by the way. The press release outlines the idea:

“From next year you may not have to queue up in a bank branch to pay-in the cheque you get for Christmas. You might not even have to wait for the bank to open. Instead you’ll be able to use your smartphone to send a picture of the cheque to your bank, and new technology could mean that your cheque is processed in 2 days in future rather than the 6 days it currently takes. You would also still be able to go into a branch to pay cheques in – banks will have the same technology.” House of Commons Library – the demise of the cheque – updated December 2014.

Major UK banks are currently undertaking trials with selected customers. If the technology is rolled out to all consumers and businesses, then it will be interesting to see whether the number of cheque payments going through clearing increase substantially because:

  • consumers return to cheque writing, rather than setting up a recipient on internet banking, knowing that the recipient’s life is made easier by mobile cheque imaging
  • consumers pay in the significant amount of low value cheques that currently go unpresented

We should hear more in the coming months. We will keep you posted.