Don’t let nostalgia cloud thinking on the cheque book, says FPB
  16 December 2009    
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But small business-friendly, alternative payment system needs to be put in place.
 

The FPB has commented ahead of the decision on whether or not cheque payments will be abolished in Britain.

The Payments Council will meet at 10am and is likely to decide that cheques should be phased out by 2018.

While it understands that many businesses may have concerns over the potential move, the FPB is not opposed to it in principle.

However, the FPB says that the Payments Council should only make a decision to abolish the cheque if it is sure the move will drive payment innovation among the banks. The FPB is arguing that they need to make sure viable alternatives are in place for the businesses and their customers who still use cheques.

The FPB also believes the overall process should be market-driven, rather than done in the interests of the banks.

FPB Policy Representative Matthew Goodman said: "Of course, lots of people have reservations about the idea of ending cheque payment. It's a familiar and centuries-old system which is still used by countless small businesses for ‘arm's length' payments.

"However, we shouldn't let sentimentality dominate the debate. Cheques are generally the most expensive payment method for businesses to process and those costs are only set to rise as fewer and fewer people use them.

"As a result, our view is that if the decision is made to gradually phase out cheques over eight years, then we aren't opposed to it in principle.

"However, the Payments Council needs to be confident that the decision will lead to practical and convenient alternatives being put in place. If they set this roadmap, the onus will be on the banks to come up with solutions for the many small business who still use cheques."

Mr Goodman added: "Of course, there are now many electronic alternatives to cheques and debit and credit card processing terminals can be found almost everywhere.

"However, the cheque still has some unique advantages and it needs to be fully replaced.

"We will be keeping a close eye on the Payment Council's decision and will let our members know what it means for them and their businesses."



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