Last month the payments council scrapped plans to completely phase out the use of cheques by 2018. This was met with a sigh of relief from many accountants who rely on them every day; however, there are also those who believe cheques are an out of date and obsolete payment method that would be best resigned to the vaults of history.
Before you make up your mind let’s have a look at the pros and cons. The cons argue that cheques incur big admin expenses, take too long to process and are vulnerable to fraud, in spite of these weaknesses cheques have been around for a long time and many organisations and individuals still rely on them as a common form of payment. Many companies and charities in particular have few options besides cheques and cash when it comes to making and receiving payments.
Attitudes towards the cheque vary greatly across the world. Finland, which is known for being one of the world’s most advanced markets in payment technology, abolished cheques in 1993 with little or no negative effects on business. 96 per cent of business transactions in the country are now conducted electronically.
Many European countries are also in the process of phasing out cheques, and there is little evidence anywhere of the process holding back businesses or economies.
Businesses in other parts of the world are much more heavily reliant on cheques, 77 per cent of business transactions in North America are still settled by cheque, which is surprising given the developed, hi-tech nature of its economy. Cheques are also the most common payment method in developing markets such as China and India, where paperwork still prevails over computer technology much of the time.
The moral of the story is that to be successful and avoid limiting itself a company needs to be able to accept as many forms of payment as possible, embracing new technology whilst being aware of their customers and clients preferences. Cheques are in decline and sure to be phased out in the UK at some point in the future, but it’s not quite time to take action yet..