UK to phase out cheques by 2018

I / London December 17, 2009, 14:58 IST

As part of efforts to put in place more efficient ways of making payments, no cheques will be issued or honoured in Britain from October 2018, the UK Payments Council has said.

The council, which represents financial institutions, yesterday voted to end the 350-year-old system of paying by cheque, which it said was in "long-term, terminal decline". Currently most payments are done using credit or debit cards and direct debit.

Every year, there are less number of cheques issued as people switch to easier ways of making payments. The use of cheques is to be phased out by 31 October 2018.

The Council's Chief Exexutive Paul Smee 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.

"But the real challenge lies ahead if we are going to be comfortable to wave goodbye to the cheque, which undeniably occupies a unique place in British culture." "The payments industry will have to react positively and take the lead on delivering solutions which suit all their customers," Smee added.

From a high of 11 million cheques written every day in 1990, the number is down to four million cheques today. The high processing cost — about one pound per cheque — has hastened the decline.

The deadline of October 2018 is designed to force banks and other financial agencies to come up with alternatives that consumers will trust.

The Council's decision follows 18 months of consultation and research by it to understand where and when customers still use cheques and where alternatives need to be developed.