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News - 1 July 2011

The end of the Cheque Guarantee Card

From Thursday 30th June 2011, the familiar cheque guarantee card will no longer be valid, and indeed in some cases companies and businesses in the South, have already stated that cheques will no longer be accepted.

It is thought that the decision by the Payments Council to abolish the card will be a blow to older people and smaller businesses in our community, with South West Trains being the first to confirm that cheques will no longer be accepted.

Age UK has said there is "a real risk" that unless an alternative to cheques can be found, the elderly will have to use cash or rely on other people. This could increase their dependency on helpers to get hold of money, pay bills or buy gifts. Older people could be more vulnerable to crime if they have to carry around more cash or keep it in their homes, the charity argues.

The Payments Council, however, stresses that many businesses already do not accept cheques regardless of whether a guarantee card is used or not. On top of this, there is no change to the validity of the cheque itself, simply that you cannot now use a card to guarantee it. A decision about the future of cheques will not be made until 2016 and only then, the Payments Council state, if they can find acceptable alternatives.

However, new technology has seen the cheque surpassed in recent years, in 2010, just one cheque in 14 was supported with a cheque guarantee card, while 71% of all cheque card holders have not used them in the last year. Infact, The British Retail Consortium (BRC) say that only one in 1,000 retail transactions now involves a cheque.

Cash, Credit Cards and Debit cards have all overtaken the cheque in usage, but the new innovation in the last few years have seen the rise of contactless payment cards. You can also transfer money electronically using online or telephone banking, provided you have account details of the person or business you're sending money to. Last month a deal was signed between Orange and Barclaycard that meant customers can now use their phone instead of a card while Pizza Express now allows their customers to pay their bill from their table using a smartphone application. PayPal also lets people to transfer cash to each other or to businesses, either online or by phone, without knowing someone's account details.

If you have any questions or wish to make a comment about this or any other of our articles, please do not hesitate to contact us.

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