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Fears for businesses and savers as more firms refuse to accept cheques

Fears for businesses and savers as more firms refuse to accept cheques

When the finance industry announced that cheques would be phased out by 2018 there was uproar.

Such was the outpouring of opposition that two years later, the Payments Council was forced to reverse its decision and promise to keep the popular paper payment slips for as long as they were needed.

But Money Mail readers today sound the alarm over fears that firms are once again trying to kill off the humble cheque.

Sign of the times:  Readers have sounded the alarm over fears that firms are once again trying to kill off the humble cheque

Sign of the times:  Readers have sounded the alarm over fears that firms are once again trying to kill off the humble cheque

Lockdown restrictions caused usage to plummet in the pandemic, and now a surge in bank branch closures means customers are running out of places to deposit them.

It comes after savings institution NS&I tried to stop posting its treasured Premium Bond prize cheques, only to retreat after a Money Mail campaign.

Last week, Money Mail Editor Victoria Bischoff raised concerns in her column that cheques were increasingly being viewed as obsolete by tech-savvy individuals.

Since then, we have been inundated with emails and letters from people who regularly use them to pay local businesses, donate to charities and send as gifts to children and grandchildren. 

Some people write more than a dozen cheques a month — and many say they are reassured by how much safer it is to pay this way, rather than online where money can disappear at the click of a button, or by keeping lots of cash in their homes.

Cheque usage peaked in 1990, when four billion were written, according to banking trade body UK Finance.

In 2010, more than a billion cheques were paid in. But this fell to 185 million during the pandemic in 2020, a 32 per cent decline on the previous year.

Barclays says the average number of cheques written by its personal customers is down by 44 per cent compared with before Covid-19 struck in early 2020.

Today, none of the High Street providers offers a chequebook to customers as standard. Those who want one must make a request.

Some new mobile banks, such as Monzo and Starling Bank, do not offer a chequebook at all.

Yet despite making up just 1 per cent of all payments, cheques remain vital to thousands of people.

Landlord Anthony Gianni, for instance, was grateful he had his chequebook to fall back on when repaying his mortgage last October. Anthony, 66, had tried to send £176,000 electronically to his lender’s HSBC account.

But after checking the name and account details, staff at his local Santander branch told him they couldn’t confirm that it belonged to the mortgage firm.

Anthony, who lives in Sunbury-on-Thames, Surrey, says: ‘They said I could still make the transfer but if it didn’t go to the right account, they might not be able to get the money back. 

There was no way I could go through with it when the risk was on me.’ The only way he could make sure the money went to the lender was to send a cheque.

He adds: ‘It may have taken a few more days to clear but at least I knew that only Rosinca Mortgages could cash my cheque.’

Santander says accounts may not be verified if the name does not match the account number or where there has been a significant mistake in either.

Corporate accounts may not be approved either as not all are set up for the Confirmation of Payee security check.

‘Cheques feel safer than online’ 

Janice Chapple still uses cheques to pay her window cleaner, mobile hairdresser and podiatrist

Janice Chapple still uses cheques to pay her window cleaner, mobile hairdresser and podiatrist

Janice Chapple, from Honiton in Devon, fondly remembers learning how to write a cheque in the 1950s, when she was 14.

Her school had set aside a double lesson to teach the children where to place the lines and fill in any gaps so the recipient cannot add any extra zeros.

Janice, 73, says: ‘Cheques were used to pay for everything back then.’

The former postwoman says she always kept a blank cheque in her handbag for any emergency. 

She says: ‘We didn’t have bank cards. If you were on holiday and short of money, you could go into any bank branch and write them a cheque. 

‘They would call your bank for a £2 fee, describe what you looked like and take you through some security questions, then hand over the cash.’

Janice still uses cheques to pay her window cleaner, mobile hairdresser and podiatrist, and to send money to charities. She says: ‘It feels safer than online payments.’

Forced out via the back door

The Payments Council, which was made up of retailers, transaction firms and banks, announced in 2009 that it would be phasing out cheques within nine years.

Vincent Saunders, 70, was one of many who wrote to the government at the time in protest.

He says: ‘Certain things would be impossible without cheques. Everyone thinks technology is foolproof, but they don’t realise how fragile it is.

‘I had to pay for an expensive cruise by cheque a few years ago when the card machine didn’t work, and a bill in the bank when the technology was down.’ Vincent, who lives in Troon, Ayrshire, says the first time he bought petrol for his car, aged 17, he paid the £1.43 by cheque.

The former technical author says he prefers not to enter his details online or give firms his credit card details, which could be cloned.

He and his wife write each other cheques to take to the bank branch to get cash. He also uses them to help friends financially by swapping cash for a postdated or undated cheque which can be deposited when they are ready.

He adds: ‘I hope cheques will be around until I am in my grave.’

Yet since the start of 2020, banks have closed no fewer than 1,268 branches, according to the consumer group Which?

Some 163 have shut so far this year, with 235 scheduled for closure by the end of 2022.

Morgan Vine, head of policy at the charity Independent Age, says: ‘As we move towards a cashless society, older people who don’t feel comfortable with or confident to make card payments or use online banking must not be forgotten or financially penalised for using cheques.

‘Moving to more digital forms of payment such as contactless cards and online banking risks older people being left behind.

‘Businesses should do everything possible to provide customers with choice to prevent this from happening.’

Delayed: The Payments Council, which was made up of retailers, transaction firms and banks, announced in 2009 that it would be phasing out cheques within nine years

Delayed: The Payments Council, which was made up of retailers, transaction firms and banks, announced in 2009 that it would be phasing out cheques within nine years

More blanket refusals

An increasing number of businesses are refusing to accept cheques on grounds of cost.

Milk & More, the biggest milk delivery service in the UK, told customers last year that they must place all orders online and pay by debit or credit card only.

When Money Mail asked 20 of Britain’s biggest insurers, fewer than half said they still accept cheques as standard.

The Post Office and Esure refuse this payment method, as does John Lewis, which says customers can pay over the phone if they don’t want to go online.

Hastings Direct will only take card payments, as it is a ‘digitally focused business’ and customer transactions are in line with that.

A spokesman says: ‘Payment card or direct debit processes provide our customers with certainty about when monies will be taken and ensure their insurance cover is maintained at all times.’

Direct Line and Churchill say a small minority of their customers pay for their insurance by cheque, but this is by exception only.

Axa says it doesn’t accept cheques for home and motor cover because it needs the payment at the time of setting up a policy.

Yet other firms, such as Saga, Aviva and Ageas, are able to accept them.

Just two of the five largest telecoms companies allow cheque payments for all services.

Sky customers cannot pay their bills by cheque, nor can those with BT Sport, Mobile or TV.

TV Licensing will accept a cheque only if you pay the £159 fee in full. You can pay monthly or quarterly by direct debit.

You may be able to pay your energy bill by cheque — but it could cost you more.

The current price cap for those who pay by monthly direct debit is £1,971 a year, based on typical usage. 

But if you pay by cash, cheque or quarterly direct debit, annual payments are capped at £2,101 — an extra £130.

Regulator Ofgem says this is to reflect the additional costs suppliers face to process these payments.

EDF customers will pay an extra £100 a year for their bill if they don’t pay by monthly direct debit, while E.ON charges £130 more.

Caroline Abrahams, charity director at Age UK, says: ‘The number of cheques being written may be declining but they remain a crucial payment method for many older people for whom they are their usual and preferred way of buying goods and services, as has been the case throughout their long lives.

‘Many people still rely on cheques as a trusted payment option for their household bills, as well as using them for a range of other purposes. 

They remain an important part of the payments landscape. It is vital that energy companies and other financial services continue to accept them as payment without charging excessive fees for processing them.’

Readers have their say 

There are many in my age group unable or disinclined to use the internet, so I continue to use cheques as often as I can in order to stop this payment method dying out.

V. D., via email.

Council tax, phone, water and electricity bills are paid by cheque out of principle. I just want freedom of choice to pay how I want to.

H. F., Devon.

The whole [electronic payment] system collapsed in Specsavers the other day, so the only solution was to pay by cheque as I didn’t have enough cash on me. I don’t write that many cheques but they are always a good standby.

M. C., via email.

Writing cheques is alive and well for me. I hate the idea of online banking, and telephone banking even more so. 

I think mistakes can be made too easily. Moreover, how nice must it be to receive a cheque in the post with your birthday card.

S. C., via email.

I still use cheques wherever possible, as I am concerned that if we lose them, how will our less IT-savvy population manage to make payments? 

Use of the debit and credit card does not meet all the needs of consumers and there are so many scams out there.

S. B., via email.

I am 77 and would be absolutely devastated if the banks were to discontinue cheques, as was being touted for a while. 

I still have a coal fire and I leave a cheque for the coalman in the cellar so I don’t need a large cash sum on hand to pay for it.

I also use cheques when shopping by post if I can, which means the funds are not taken out of my bank until the company has despatched my order.

E. C., by email.

As an ‘older couple’, my wife and I still use cheques on a regular basis and will continue to do so, despite the constant pressure from our bank to use a mobile app or go online. 

We feel more in control of our finances by keeping to the old system.

D. P., via email.

I am a little over 70 years old and prefer to write a cheque when paying for expensive items. I’m not a complete dinosaur, as I use online banking when it suits me.

S. P., via email.

My husband and I steer clear of internet banking and still rely heavily on cheques. In the past month we have issued eight between us, which is more than we have paid on our cards.

H. J., via email.

I am 74, fairly internet-savvy and still ride motorcycles. I always think that using cheques is safer than bank transfers.

R. H., Suffolk.

I live in rural North Devon where we only have use of a mobile bank once a fortnight for an hour, so for me cheques are a necessity.

P. H., via email.

The advantage of cheques and cash is that they minimise the chance of someone tracking how you are using your money and the ever-increasing possibility of scams and fraud.

R. M., via email.

At nearly 92, I occasionally have to resort to writing cheques because I don’t have cash in the house. 

Because of age and past lockdown restrictions, I have not visited cashpoints.

M. A., via email.

My late mother was housebound in her last couple of years and she reimbursed me monthly by cheque for her shopping. 

Should I need the same care in the future, I would need a way to reimburse the person shopping for me — and it is unlikely to be by using stressful internet banking.

J. B., via email.

Payments changing with the times

It used to take five working days for a cheque to clear but as a result of technology rolled out in 2019, you can now access the funds as soon as the next day, depending on who you bank with. 

Many providers, including Lloyds, HSBC, Barclays and NatWest, also allow you to take a picture of the cheque on your smartphone and deposit it into your account via the mobile banking app.

A UK Finance spokesman says: ‘Cheques remain a valued method of payment for many customers and the industry continues to invest significantly to facilitate their use.’

However, Dennis Reed, from the campaign group Silver Voices, says he worries that banks are trying to phase out cheques altogether.

He says: ‘Banks used to send out chequebooks on a regular basis, but now you have to request them and they are much smaller. They also charge fees for small businesses — it costs me 70p to deposit each membership cheque.

‘They are playing the long game by discouraging usage so one day they can turn round and say we no longer need them.

‘There may be only a small number of people who use them regularly but they are the ones who rely on them.’

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