SMALL FIRMS UNPREPARED FOR PHASING OUT CHEQUE GUARANTEE CARDS
18 April 2011
According to recent survey results from Worldpay, 75% of SME’s are unaware that the government is to begin phasing out the cheque guarantee card this June.
The survey also found that two of every five small firms are still relying on cheques as a day-to-day payment method, while almost half of respondents confessed they had no idea that the cheque could be phased out completely in 2018. More than 60% of respondents said they have made no plans to make payments by alternative methods, and 29% said they still expect to rely on cheques over the next few years.
In 2009 the UK Payments Council announced that cheques will continue as a means of payment until 2018, but the cheque guarantee facility for all bank cards will end on June 30 2011. Over the next few months, banks will be contacting businesses that still use and accept guaranteed cheques to make them aware of alternative payment schemes. In advance of this timeline some banks have already stopped issuing new cheque guarantee cards.
ENQUIRY RE-OPENING INTO WHETHER CHEQUES WILL ACTUALLY BE PHASED OUT BY 2018
In a news release from the Telegraph today there is apparently public concern over the future of cheques and this has caused the Treasury Select Committee to reopen its inquiry.
The Committee originally launched an inquiry into the future of cheques in February last year to consider whether the payment method should be phased out by October 2018. Since then the Treasury Select Committee say they have been inundated with letters from the public saying they rely on cheques.
At the time of the original inquiry, the Committee was unconvinced by evidence on the cost benefits of phasing out cheques and the UK Payment Council's statement that cheques were in "terminal decline". The UK Payments Council had previously stated that cheques would only be phased out by 2018 if a viable alternative had been developed.
Treasury Committee Chairman, and MP Andrew Tyrie said: "The Payments Council had seemingly forgotten about the millions of people who remain less at ease with the latest technology. Many charities, small business and vulnerable people – including pensioners – depend on cheques. Their needs must be considered."
The Committee has decided to reopen the inquiry to hear evidence on current usage of cheques, the social and finance implications of an abolition of the payment method and suggestions for viable alternatives.