The decision of the Payments Council to phase out cheques by 2018 may not be bad news for small firms, a leading business group has claimed.
The Payments Council, a panel of banking representatives, voted to end the 350-year-old span of the cheque by October 2018.
The cost to the banks of processing cheques is four-times higher than that for electronic methods of payment.
Despite the fact that some four million cheques are written every day, their use has been falling over the years.
That said, concerns have been voiced that the move could harm many smaller firms that traditionally depend on customers paying by cheque.
However, the Forum of Private Business (FPB) has come out in favour of the decision, arguing that the process could be “painless” provided that the banks introduce a simple and convenient alternative.
Matthew Goodman, the FPB’s policy representative, said that, although half of the business group’s members use cheques, the method is becoming an increasingly expensive option for businesses and that, as it declines, the banks will impose ever-greater costs on the firms that continue to accept and sign cheques.
Mr Goodman went on to say: “It would be easy simply to criticise the Payments Council’s decision. Instead, we are taking a pragmatic approach based on the reality for small businesses.
“We believe that the better option is to use the publicity this issue has generated to pressure the banks into coming up with practical, convenient and cost-efficient alternatives to the cheque – a ‘third way’ which will benefit all parties concerned.”
He pointed to the possibility of a paper-based payment system which will be little different from the cheque in practice but will cut out the expensive and time-consuming clearing process.
Mr Goodman concluded: “The Payments Council has said it will only take a final decision to phase out cheques in 2016 if it is satisfied the banks have put viable alternatives in place. We will be working with them, and our members, to make sure this is the case.”