How to cope when cheques disappear

By JO THORNHILL
Updated: 07:12 EST, 17 January 2010

Financial Mail has been deluged with correspondence from worried readers over the demise of the cheque in 2018 - and the lack of details about any suitable alternatives.

Burden: Butcher Tony Sherwin must pay an average 51p for each card transaction

The main fear is how payments will be made to tradesmen and how cash gifts can be sent safely in the post. Many have also expressed concern that the banks' push towards online and phone banking will accelerate the closure of branches and post offices.

Financial Mail put a number of readers' queries to the Payments Council, which oversees cheque, card and bank transfer payments and which devised the timetable for the phasing out of cheques. The responses can be seen in the box, right.

Ann Sherwin, 55, of Thame, in Oxfordshire, is among those angered over the threat to cheques. Ann and her husband, Tony, 56, have run a butcher's shop in the village of Long Crendon, Buckinghamshire, for 15 years.

They do weekly home deliveries for about 12 elderly and housebound customers and the majority pay by cheque.

'The cheque system suits many older people,' says Ann. 'This way they can keep a record of what payments have gone out of their accounts. They don't like using credit cards and they don't want to keep much cash in the home.'

Ann and Tony, who have two grown-up daughters, calculate that they have to pay on average 51p for every card transaction they process in their shop, while paying in cheques at the bank is free of charge. 'I want to keep cheques from a business point of view as well,' says Ann.

John Race, 67, from Shaw, Lancashire, is another fan of cheques. He always pays for his Oldham Athletic football season ticket by cheque. He also wrote cheques at Christmas for his two grandchildren and has to pay the ground rent on the flat he shares with his partner, Sheila Bowman, 65, with a cheque.

'There are some companies and shops around here who simply won't accept anything other than a cheque,' says John, a retired training officer for British Gas. 'It's hard to see what would be a suitable alternative.'

Margaret Mullahey, 72, from Buxton, Derbyshire, also wants cheques saved. The retired accounts manager doesn't like to bank online because she worries about security risks.

She says: 'Why can't bank customers have the choice about how they pay for goods and services? If everything goes online, it seems inevitable we will lose local bank branches.'

The Payments Council recognises that many people have concerns about the scrapping of cheques and that work needs to be done to fill the void they will leave.

Spokeswoman Jemma Smith says: 'The eight-year time-frame for the end of cheques is there to make sure that viable alternatives are in place and acceptable.

'In some cases this might involve enhancing existing services, but in others it might mean developing new options.'

›› The Payments Council answers your questions:

How will I pay small tradesmen such as window cleaners and my paper bill at the newsagent? These people cannot take card payments and do not want large sums of cash.

Many small businesses are already making the move towards card payments. Cards are becoming widely accepted and growth continues among small traders. Other payment options are being explored such as payment using a mobile phone handset. The Payments Council is also consulting with small business leaders to establish suitable alternatives.

I want to send cheques to my grandchildren for Christmas and birthdays. Sending cash in the post is too risky and I don't know what they want so vouchers are no good. How can I send the money?

This is one area where we do expect alternatives to emerge. These might include prepaid plastic gift cards or some form of generic paper voucher.

My elderly mother is housebound and pays by cheque for deliveries she receives from local shops. I don't want her to keep large sums of cash in the home. How will she manage?

Elderly customers often depend on cheques and if the target date of 2018 is to be met it is critical their specific needs are met. The Payments Council will continue to work with key groups such as the charity Age Concern and Help the Aged to understand these needs and make sure that no one is disadvantaged.

Many charities, clubs and voluntary organisations use chequebooks to pay accounts, but for security reasons two signatures are needed on transactions. How will this work if we can't have a chequebook?

Some banks already provide dual authority functionality within their online banking solutions, but the Payments Council will also consult with relevant groups to understand better what payments need to be made and how these needs might be met. Meeting charities and clubs and finding payment options that fulfil their needs - for donations, subscriptions and making payments - will be key to our work.