In a long mooted move, the major High Street banks in the UK have voted to stop clearing cheques in the country by 31 October 2018, bringing 350 years of history to an end. The representative body, the Payments Council, welcomed the move, which it pushed for in its original national payments plan last summer but backed off after consumer complaints. It now says that the end date will help the gradual phasing out of the payment method, but a review will be carried out in 2016 to check on progress

The Payments Council is fully supportive of the UK banks move towards a policy of 'managed decline' in the use of cheques and will help oversee the process. Now the 2018 end date has been set, the Council believes that its active involvement can help prevent confusion and deliver cheque alternatives that are acceptable to users.

Commenting on the decision, Paul Smee, chief executive of the Payments Council, said: "Customers aren't likely to see any immediate change as the target date is still a long way off. This announcement marks the start of the extensive work that we need to do to ensure that everyone has a viable alternative, should cheque clearing close. We aim to be very transparent and we will continue to consult fully with all interested parties.

"There will be a critical review in 2016 when the Payments Council will decide whether sufficient change has occurred against agreed published criteria, to press ahead to do away with the cheque in 2018. 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."

The decision follows 18 months of consultation and research, since the national payments plan was published in May 2008, to better understand where and when customers still use cheques, and where alternatives need to be developed. This involved consulting with groups representing consumers including the elderly and consumers with disabilities, and those with other special requirements, plus small and corporate business users of cheques.

"Feedback from all these groups showed that the majority accept that 2018 is a feasible end date but that many expressed concerns about viable alternatives being in place and being accessible to all those who currently use cheques," Smee added. "This is why we have set the 2016 review date."

"I'm convinced that 2018 is achievable, 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," continues Smee. "The payments industry will have to react positively and take the lead on delivering solutions which suit all their customers. I know that the Payments Council Board will pay particular attention to check that the needs of disadvantaged consumers are addressed."

With many supermarkets, such as Asda and Tesco, and retailers like Boots, already saying that they will no longer accept cheques, or will phase them out shortly, the momentum for abolition is beginning to build, although Age Concern and other groups have expressed concern that the move could exclude certain vulnerable people. The business case for ending this payment method is strong though, with cheques costing around £1 to process, four times as much as electronic payments - the potential savings for banks run into hundreds of millions per year.

In 2000 cheques represented a quarter of all non-cash transactions but by last year they accounted for only one in eleven. Compared with a peak of 10.9 million cheques per day in 1990, by 2008 there were just 3.8 million a day. If the phasing out process succeeds we should see these numbers decline further but the onus is now very much on the banks to offer attractive alternatives, whether that be debit cards, mobile payments or other options.

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