UK Wants To Phase Out Checks By 2018

The board of the UK Payments Council has set a date to phase out checks in a bid to encourage the advance of other forms of payment. They added, however, that the target of Oct. 2018 would only be realized if adequate alternatives are developed. "The goal is to ensure that by 2018 there is no scenario where customers, individuals or businesses, still need to use a cheque. The board will be especially concerned that the needs of elderly and vulnerable people are met," the Payments Council said in a statement.

Comments

How do people pay eachother?

[Anonymous Coward]

If I wanted to buy a car from somebody, how would I do it? Right now the only reasonable options are PayPal, check, cash, or credit card. The only tender an ordinary person would accept for a car are cash and check, and most people wouldn't want to handle enough cash to pay for a car.

dom

Re:How do people pay eachother?

[Richard_at_work]

You get a Bank Draft, which is accepted as cash at any bank but for the purposes of the transaction is the same as a cheque - just a convenient single bit of paper. In the UK this is the main alternative to paying for a vehicle by financing - quite a few dealerships will not take several thousand in cash.

Re:How do people pay eachother?

[Valdrax]

There are usually some unreasonably high fees associated with bank transfers like that. Checks are virtually free. Should it cost $20-$30 to make every transaction in the future when you could have wrote a check for free?

There aren't such high fees in countries where that's the normal way to do business. Heck, you can do it for free in the US between many credit unions, including credit unions on other sides of the country. I've borrowed and repaid money to my family that way.

A check is nothing more than a bank transfer form with your account and other info written down on it. The only reason bank transfers cost money in the US is because they can. (Should you at this point have any surprise left at the fact that 90% of bank fess are set up to screw you instead of cover costs?)

Re:How do people pay eachother?

[bbtom]

That's exactly the right point. The Payments Council don't seem to have really thought out person-to-person transfers or small business transfers. If someone wants to pay me money using a cheque, all they need to know is my name (or the registered trading name of a business etc.). With a bank transfer, you need to know the bank account details of the person - and nobody is quite sure as to how public bank account numbers ought to be. Cheque still rules for getting paid expenses too. I've done the PayPal thing, which is cool - except PayPal take a slice of the transaction. I've done the online banking stuff and it's painful - crappy websites, no notification (how about an e-mail from my bank every time a transaction goes through my account? GPG exists, goddamnit - use it!), security designed for the sort of people who set their passwords to "password1" and tell all their idiotic friends their MySpace password and then wonder why they get "hacked". If you think writing a cheque is inconvenient, how about carrying a laptop and 3G dongle around with you in order to do bank transfers on the website instead?

Yeah, in shops, use a damn debit card. But for person-to-person transactions, cheques are pretty convenient. The security sucks, admittedly - a shared, public key that anyone can copy is not really security at all (a bit like credit cards: credit card fraud, at least until a few years ago, consisted of writing down the number and details that was given out to the merchant upon every purchase - that's real secure). But with cheques, you can post them - slip 'em inside birthday cards. You can give them to third parties (children, employees etc.) who can hand them to their eventual target. You can use them even where there isn't an Internet connection - and, well, outside of the big cities, there's plenty of rural countryside with no 3G service. You can post-date them, and the recipient can return them - my old school used to do this with their after-hours activity programmes - you'd give them half in a current-dated cheque and the other half in a post-dated cheque, so if you don't decide to finish the activity, they just return the second half of the payment.

The only problem with cheques is that I have to walk to the bank to pay them in and it costs the banks money to process them. The walk is quite good exercise, and since the banks got £300 billion of taxpayers money last year under the Special Liquidity Scheme, and they pay themselves HUGE FUCKING BONUSES, I figure the odd 25p here or there to process my damn cheques is pretty reasonable. Not to mention the huge amounts they've had in fees and fines - fines they've charged me due to the ineptitude of other banks (who have web security models designed for the aforementioned idiots). Not to mention interest they make off the money we keep in them. They seem to want to have it both ways: they argue that cheques cost a lot to process AND nobody is using them. But if nobody is using them, surely the number of people you need to employ processing cheques is pretty minimal.

While I'm ranting about banks, here's another thing: it's only in the last year that UK banks have actually got their shit together to be able to move money between accounts and it take less than four fucking days. A family member moves the housekeeping money from one account to another every month. He does this by going to one bank, drawing out however much it is (a few hundred pounds), walking down the street to the other bank and paying it in. Every time, the helpful bank assistant seems to suggest that he could do this electronically. The difference is, if you pay in cash, it is immediately available - while a BACS transer takes 3-5 days. They've only recently changed this so that it takes at most a few hours. But Christ-on-a-fucking-wheel, why did it take until 2009 to be able to move money instantly from one account to another? And it's still only certain banks that do the same-day transfers. These guys are absolutely retarded. With the billions they make every second, you'd think they'd be able to install a few broadband lines between their offices and make it so money can get transferred quickly. Three days - seriously?!

'Too big to fail' presumes the banks aren't the epitome of fail to start with.

Re:How do people pay eachother?

[W2k]

In what country are high fees associated with bank transfers? Where I live (Sweden), going to my bank's on-line service I can transfer money to any other bank account at no charge whatsoever.

Re:How do people pay eachother?

[Hognoxious]

With a bank transfer, you need to know the bank account details of the person - and nobody is quite sure as to how public bank account numbers ought to be

They're printed on the bottom of cheques, so if you've ever given a cheque to someone then he knows them.

Not to mention the huge amounts they've had in fees and fines - fines they've charged me due to the ineptitude of other banks (who have web security models designed for the aforementioned idiots).

Does that translate as "I can't remember my password and I keep getting locked out. Also, I'm so poor at managing my cashflow that I'm always overdrawn"?

But Christ-on-a-fucking-wheel, why did it take until 2009 to be able to move money instantly from one account to another? And it's still only certain banks that do the same-day transfers.

That's a fair point but it's nothing to do with absence of broadband lines. It means the bank has a huge rolling float of in-transit money that it can earn interest on while not paying any out.

Re:How do people pay eachother?

[TheEvilOverlord]

I think this is part of the confusion really. The banking systems in different countries are quite different and have different charging models. They are just trying to get rid of what is a free service in the UK for personal accounts. I know a few small business owners that use personal accounts for their banking precisely because they don't charge for transactions.

I have to wonder what UK bank the GP is using as I have accounts with three major banks and they all charge around £25 to transfer money between them. I've found the easiest way to change money between accounts is to drive to the bank, withdraw in cash and walk across the street and pay it into the other bank. (luckily all three banks have branches next to each other) Stupid in the 21st century, but it's the quickest and cheapest way for me to do it.

Re:How do people pay eachother?

[Necron69]

I've stumbled into this problem recently myself, when my ex-wife switched bank accounts, and my payroll department suddenly realized it was illegal for me to be auto-depositing my child support to someone else's account (despite the fact that I've been doing it for four years). Since my ex now lives many hours drive away, and refuses to set up a joint account for deposits, this presents a problem.

After some research, I was forced to conclude that even in late 2009, there is no way in the United States to cheaply and electronically send money to someone else without paying a substantial fee, or involving a third party. PayPal is slow and the ex hates it. A wire transfer costs $20 from my bank. I suppose there is always Western Union, but nothing approaches the cheapness of a check and a 44 cent stamp - it just takes most of a week to get from here to there.

Necron69

Re:How do people pay eachother?

[Anonymous Coward]

You appear to unaware of the (pretty obvious) alternative model which exists in plenty of other places - USA != the rest of the world.

Speaking as someone who just moved to the US from a country with a sensible banking system, it's absolutely baffling that noone here - banks or customers - seems to have cottoned onto the idea of free account to account transfers.

That's the way I have always transferred sums of money to friends or relatives when cash wasn't convenient - it's just so much easier and more convenient - I can log into the bank website, put in the persons account number and transfer the money in a couple of minutes, with the full sum showing up their account the next day. No waiting for cheques to clear, no trips to the bank for depositing cheques, no having to keep track of how much of your account balance is earmarked for cheques you've already writting.

It must be cheaper for the banks to provide than the processing of paper checks, yet citibank charge some absurd fee for domestic wire transfers.

I thought they were already gone in EU

[Anonymous Coward]

I hadn't seen a check in Finland for over 10 years. Then I come to US and find out it's the common way to pay bills. And transfers from bank account to another one are difficult or even impossible between two random people.

Re:I thought they were already gone in EU

[eggnoglatte]

Well, except that the recipient of the check has to run to the bank for the deposit instead of just verifying online that the money has arrived. Likewise, I have to hand-write a check for my rent every month, rather than just going online and clicking a button to transfer a pre-registered amount to a pre-determined destination account (or just setting up a completely automatic monthly transfer).

Banking in North America is so far behind Europe, it is not even funny. Quite an adaptation when I moved back to Canada.

In ong run should just switch to digital cash

[JoshuaZ]

We have cryptographically secure algorithms for anonymous digital cash. These schemes are easy to implement using blind signatures. http://en.wikipedia.org/wiki/Blind_signature. If properly implemented such a system provides far more anonymity than cash, checks, credit cards or debit cards. We really should be working to switch to such a system.

Re:Good Riddance

[MakinBacon]

As a former cashier who worked at a nationwide chain, I believe that the death of the check will be welcomed by those at all levels of retail. I have been involved in many horror stories caused by my registers check scanner accidentally tearing the check in half. Also, I had the awkward duty of explaining to people that their checks are no good and cannot be accepted without being able to tell them why (when the cashier scans your check, the register automatically does a background check).

Sounds Hard

[pgn674]

Every month, I pay my landlord (a professor; I'm his only tenant) with a check. I wonder what system would replace that, that would be significantly different from checks, but that my landlord could accept?

Also, what if I run over someone's bicycle, and I want to give him a blank check to pay for it? Or, more realistically, what if I need to pay an individual that I have only just met more money than I have in cash? What system could replace that that would be significantly different from checks?

I guess it could be done, but it might take some creativity.

Re:Sounds Hard

[adolf]

Back in context: This delay seemingly inherent in current implementations of Electronic Funds Transfer, is worse than a paper check...how, exactly?

Sure, with a check you've got a bit of paper (at some point) which states that so-and-so promises to pay $x from the account in the MICR code at the bottom. But once you pass that on to your bank, you're still waiting, and you still don't know if the transaction was valid until the money actually lands in your account some days later.

(Not that I'm arguing against what may be your main point: There should be a much faster means of conducting a transaction between layfolk than exists now.)

Checks and transfers

[otter42]

I lived in France for four years, using checks. Now I live in Luxembourg and use bank transfers. I much prefer bank transfers. It's easier, faster, less prone to fraud, etc...

However, a couple things bank transfers don't do that checks do:

1) Security deposits: recently my fiancée and I reserved a monastery in France. We had to make a deposit of, what is for us, a significant amount of cash. With checks this is easy. He has a check, which is only valid if we don't show up, and we have a year to pull together the money. If he has hard cash, first of we lose access to that cash for a year. Second, if he doesn't deliver the goods, he has the cash, and all we could do about it is sue him!

2) Large amounts between individuals: we're selling our car and aren't quite sure what to do. Obviously cash is a little inconvenient, but a wire transfer happens at a bank or online. So neither of these work as nicely as a check either. Of course, I'm certain there's some way around it, but until an online bank transfer happens immediately, it won't be as nice and secure as a check.

Small Businesses Will Take a Hit

[CaptainOfSpray]

There are lots of small businesses that will be damaged or made unprofitable. When taking low volumes of payments, where a cheque is much more cost-effective than taking cards, for instance the weekends-only kind of bed & breakfast - getting a card terminal costs £400 and just isn't worth it - that £400 represents our profit for an entire summer.

Re:Good Riddance

[AliasMarlowe]

not all customers have access to electronic funds transfer.

That's your problem, right there. Fix it.
The capability for electronic funds transfer should be automatically granted with any bank account - both via debit card and via internet. In the Nordic countries, cheques are essentially extinct. If you try to present one at a bank, it is treated as a truly exotic item, and may cause confusion. The only cheques deposited are invariably from countries with backward retail banking (UK, US, Canada, etc.), and the clearing time and fees can be significant. On the other hand, electronic transfer to or from other accounts (worldwide) is fast and cheap, and provides immediate confirmation of receipt of the payment.
I regularly pay vendors in Germany, Sweden, and Finland with direct electronic transfers via internet when making purchases or handling invoices. There is no risk of "delayed/lost in the mail" as happens to cheques with remarkable frequency. On-the-spot payments (small stores and large, petrol stations, vending machines, parking meters, etc.) are made using the debit card for the account. There is no need to carry wads of cash in your wallet, and shops do not have to handle or transport large amounts of cash.

Re:Good Riddance

[iamacat]

Not every business is a nationwide chain. Any two people can use a cheque for a transaction without paying a transaction fee or going through inconvenience of setting up a credit card processing service. If I have personal means to verify your trustworthiness I may accept your check regardless of your eligibility to get a credit card. And a pen works just fine when there is no possibility of a network connection to process a card. Just because something works for Wall mart doesn't mean that a street cornet vendor or a one-off private seller should be denied additional options.

You hate our freedom

[iamacat]

You are contradicting yourself. The unique property of cash is that the government doesn't need to know that you bought some communist books in Barnes and Nobles or that you arranged a private business transaction to voluntary introduce a mind-altering substance into your body. They are still free to jail you if you resort to violence as a result of getting stoned or your ideology. Something tells me that Britain's effort to mandate electronic payments is precisely to track thought crime and precrime.

Re:Good Riddance

[ommerson]

You are labouring under the assumption that cheques are a cheap form of payment for small businesses. They are not, and as volume of cheques in use reduces, it is likely to become increasingly less competitive. I'd hazard a guess that payment by debit card is already a much cheaper way of doing business, and one in which payment is guaranteed (unlike cheques, which might bounce).

The future is almost certain to be mobile card payment terminals of the kind used in restaurants, with a GPRS/3G data connection to the merchant. These are already in common use amongst tradespeople.

If you consider that almost everybody trusted by a UK bank with a cheque book is also issued with a cheque guarantee card - which in almost all cases is some kind of debit card - it's hard to claim that this method of payment is any less available.

However, there are some definite accessibility issues to be addressed for disabled users, but cheques suffered from a different set of these.

Wireless Credit Card Processing

[Xerfas]

Here in Sweden there are lots of companies who buy products like these http://www.merchantexpress.com/wireless_credit_card_processing.htm which is a wireless credit card machine. As long as you use it in an area where cell phones work, most of these will also work.
It's perfect when you are on an outdoor market, a convention etc. Even our ice cream trucks in Sweden use wireless credit card machines.
Last time I saw a cheque used was more then 15 years ago, mainly because we have used credit/debit cards for so long that we no longer need or want cheques. For instance, cashing in a cheque from USA in a bank here can cost about $70-90 USD no matter what the amount is. So we rather do electronic payments, cash or debit/credit cards.

Re:Good Riddance

[ggeens]

With a postal order.

And when was the last time anyone under the age of 90 actually used one of those ?

Do they even still exist ?

Postal orders still exist, AFAIK. Don't remember when I last used one. The only reason to use those is to make an international payment to someone who doesn't accept credit card or money transfers. (Those people are extremely rare.)

I shudder to think how the coversation would go for anything more

The post office makes you fill out the form completely (writing down the same information 3 or 4 times, including the amount in text). Then, they take your money and give you one part of the form.

Re:Good Riddance

[QuestorTapes]

>> not all customers have access to electronic funds transfer.

> That's your problem, right there. Fix it.

It's a problem, but not the only problem in the US.

> The capability for electronic funds transfer should be automatically granted with any bank
> account - both via debit card and via internet. In the Nordic countries, cheques are
> essentially extinct.

Most other nations have different financial protections on EFTs than here in the US.

One root cause of this is that the banking system in the US grew from state-chartered banks, not federally-chartered banks. 50 states, all with different rules and regulations.

Much of the current legal and technological infrastructure to begin to _consider_ phasing out checks in the US was only put into place post-911. At that time, the federal government was confronted with the fact that they had been nursemaiding a check clearing system leftover from the early 20th century, and even a brief interruption of airline service significantly impeded the ability to move huge boxes of paper checks across long distances quickly.

The legal overview still isn't as good as it needs to be. People in the US are still advised by security and financial planners to use _credit_ not _debit_ cards, because the protections against errors and fraud are "bank policy" which can change in an instant, not "the law".

Correcting an issue with bank errors in clearing a check required banks to put the funds back in place and follow a real procedure for resolving the issue quickly.

With EFTs/Debit cards, banks are typically _very_ slow to restore the funds, and often glacially slow (and incompetent) at resolving the issues.

Personal experience: I've set up EFTs for recurring bills at various times in the past. In each case, the bank was unable to complete some transfers, unable to cancel the transfer, unable to resolve the issue quickly, and I was charged for late payments. Some of these took several _months_ to resolve.

> The only cheques deposited are invariably from countries with backward retail banking (UK, US, Canada, etc.)

As noted by another poster, it isn't all retail. In fact, it likely isn't even _mostly_ retail that deals with checks. Small service industries: appliance repair, contracting/home remodeling, charities and non-profits, small-business suppliers and wholesalers, shippers and transport firms, any companies dealing with Asian, South American, or former Soviet-block nations need to deal in checks all day, every day. Or lose the bulk of the business they do.

> electronic transfer to or from other accounts (worldwide) is fast and cheap,
> and provides immediate confirmation of receipt of the payment.

Not in the US, and the banks are shielded from the need to confirm _by law_. I'm also curious about the claim that it's fast and cheap (reliable implied) worldwide. I mentioned several regions above where checks are still common. I have no doubt that fast, cheap and reliable EFTs are available in all those regions. But are they reliable to all businesses in those areas? Sure, if you are dealing with a big Asian electronics, metals or chemicals supplier, I'm sure it's no problem. What about the small-lot specialty suppliers; do they have the same fast EFT access, with reliable transfers protected by law? I'm not so sure.

> There is no risk of "delayed/lost in the mail" as happens to cheques with remarkable
frequency.

Not in the US, where delayed/misdirected, effectively "lost" EFTs are commonplace.

> On-the-spot payments (small stores and large, petrol stations, vending machines,
> parking meters, etc.) are made using the debit card for the account.

Mostly true in the US; some things (parking meters) are not usually equipped for debit cards. In part, this is due to the fact that there are more parking meters in some major US cities than there are _people_ in some of the Nordic countries you mentioned. Since ownership and management of t

Re:Wrong

[Anonymous Coward]

Try doing american punctuation with a computer program and see how far you get :-)
string a = "hello, world!;"
versus
string a = "hello, world!";
And the UK counts floors starting from 0 not 1, like any programmer using a proper language.

Re:Wikipedia says:

[TheRaven64]

Not sure what the source for those statistics is, but given that India has more people speaking Commonwealth English than the USA has people, I'm very surprised by that chart.

Re:Good riddance! Welcoming a cheque-free world

[LordKronos]

For a particular store? What if I don't know where they'll want to spend it?
A preloaded credit card that they can spend anywhere? Yeah, sorry but they generally charge a fee to purchase one. There's also the fact that they CAN'T be spent anywhere...still plenty of places that don't take credit/debit. And what if they choose to save the money for a downpayment on a house or something? A gift card isn't much use there either.

Re:Good Riddance

[CodeBuster]

As an American living in the United States I would just like to amplify what the parent is saying about the legal frameworks surrounding checks and credit cards. In the United States the banks are well known for dragging their feet on issues that the courts and regulators have not forced them to address. There are clear legal procedures and consumer protections in place for checks and credit cards, but the state of affairs with debit cards and electronic transfers is much more tenuous and is often a matter of "bank policy" rather than firmly settled law. The problem in the United States is not technical, but rather legal and regulatory. Until banks are forced by law to offer the same protections to debit and electronic funds transfers as they do to checks and credit cards (with similar consumer protections against botched transactions of missing funds), many people will remain reluctant to use the later methods of payment for large or important transactions.