BBC News - Cheques to be phased out in 2018

http://news.bbc.co.uk/2/hi/business/8414341.stm

by wglb • 17 years ago

21 35 17 years ago

news.bbc.co.uk

tptacek2• 17 years ago

They mean personal checks, right? Because businesses still use checks all the time, despite being more sophisticated users of money than consumers.

ErrantX3• 17 years ago

nope, as far as I am aware (my parents use them a lot in their business so they have a particular interest) it's all cheques.

tptacek2• 17 years ago

It's hard to believe that business checks are going to be phased out in a world where Morgan Stanley takes $9Bn in funding in the form of a paper check.

For small businesses, it's also hard to see how you replace the value of being able to fedex a check to a new vendor. Online payment works in places where both companies are established and have a relationship, and less well elsewhere.

I know this is UK and not US, but is there something I'm missing about how business works in the UK?

axod5• 17 years ago

All cheques. Cheques are not accepted most places now. They're still used a bit, like to pay window cleaners :/

I won't miss them.

hugh_• 17 years ago

They're still used extensively in the US. I lived 25 years in Australia without a chequebook, but since moving to the US I've written scores of 'em.

Mostly, the problem is that the US still lacks a system for transferring money freely between bank accounts. If you want to send someone some money electronically you wind up paying fees at both ends.

(Also, some people use cheques just to be annoying, like the old women who write cheques to pay for their groceries at supermarkets.)

mattmanser• 17 years ago

I don't get it, according to the figures in 2017 we'll be down to 300 million cheques a year, which is roughly 4 cheques per year per person in the UK.

That's still a pretty high number in my book given that a lot of them will be for large money amounts.

axod5• 17 years ago

Most of them are students paying for drinks at the bar by cheque. Will not be missed.

Raphael2• 17 years ago

Sauce?

mseebach3• 17 years ago

Electronic Cheques should be easy to implement in an online banking infrastructure.

The debitor logs in and creates a new cheque. Amount, "pay to the order of", "for" and expiry-date are filled out as well as an e-mail address for the creditor. Perhaps also a password.

The bank emails the creditor saying that there's a cheque for him, tells him to click the link. He's prompted for the password, and asked to provide the account for the money to be transferred into. Once he confirms, a regular bank transfer is set up, and at the same time the recipient gets a confirmation that there is coverage for the cheque.

The final check could be that the debitor bank queries the creditor bank to confirm that the account is in the name of the creditor.

This procedure allows you to "cut a check" in advance for a business meeting. The e-mail arriving is like putting the money in escrow. When you sign the contract, you give the creditor the password, and that completes the transaction. If not, just wait for the expiry-date and the money is out of escrow.

rlpb• 17 years ago

Your proposed system doesn't provide non-repudiation, which is something that paper cheques do provide.

http://en.wikipedia.org/wiki/Non-repudiation

A suitable XML schema for digitally signed cheques would work though, provided that it was thought out properly. It wouldn't even need live Internet connectivity.

However, this still leaves those instances where a computer is not necessarily available.

mseebach3• 17 years ago

It has the same non-repudiation that all other online banking transactions have.

qw• 17 years ago

That sounds extremely complicated. I don't see the need to emulate checks electronically, when there are good solutions today.

Scandinavian business and personal users have no problems with transferring money using online banks. You can even get the invoice electronically and just click a button to pay it, and the amount will be automatically transferred at the due date. I have heard rumors that checks are sometimes used in B2B, but I expect it to be in a very limited set of cases.

I remember some old people who used checks in the stores when I was a kid (many, many years ago), but I doubt the stores would even know what to do with a check if they were given one.

Edit: I did a search and found an article from 2006. The newspaper suggested that people should have a check book in case of problems with the electronic system (many don't carry much in cash). They interviewed the CEO of a major bank, and he wasn't even sure that the bank gave out check books at all :-)

mseebach3• 17 years ago

Large sum transactions with low level of pre-established trust still don't have a replacement for a check. I bought a used car from a small dealership. The dealer didn't have the resources to check my credit, and I didn't trust him enough to just wire money to him ahead of time. Also, there's no way I'm going anywhere, especially not in the kind of neighbourhoods that have small used car dealerships, with enough cash to buy a car on me.

So I went to my bank and got them to make a check in my name for a ridiculous fee, and brought that, and figured, "why can't I just do that online"?

Another purpose would be quick settlements of bills. If I transfer the money it takes up to three working days for the amount to appear in the creditors account -- sometimes that's not practical if I need someone to ship something to me today -- this electronic check would solve that problem, because the creditor would be informed immediately by a trusted party that the money is there and on the way.

anApple2• 17 years ago

Cheques should be reintroduced in Europe so that the US. can't ocpy all the transactions as it does right now with SWIFT.

trezor• 17 years ago

I'm over 30 and I have never owned a checkbook. Checks are backwards, insecure and prone to abuse with no real guarantee for whoever gets one that he will actually get money, which makes them even more worthless.

If I were a bank I would do everything in my power to get rid of checks pronto.

s3graham• 17 years ago

You're clearly not from North America then. :(

Not that I disagree with ditching them, of course.

gasull• 17 years ago

Indeed. I never owned a checkbook until I moved to the US. Why does everybody love them here?

furyg3• 17 years ago

I'm from the US, never really liked checks, and then moved to Holland (where they simply do not exist) and was amazed.

You have 4 ways to pay for things:

* Transfer from your online banking. You need the other party's account number, their name, and city. It's free for both parties; instantaneous (money is no longer available to your account, and is immediately available to the other party); can't be done if you don't have a high enough balance (no bounced checks); and can be set to be recurring. It makes the US checks/fees/delays look like a joke, but doesn't provide 10 different revenue streams for the banks.

* You can use your debit card (called pinnen or 'PIN-ing') at any stores that have a scanner. There are no fees, you have to enter your pin. Most places (supermarkets, restaurants) will let you PIN, but don't take credit cards. Like transferring money, charges are immediate, done in the order they are received, and don't go through if there's not enough money.

* All debit cards have a little smart chip on them, which can be used to 'ChipKnip'. You load small amounts of money directly onto your chip, and you can now use your card to pay for small things (parking meters, printers at a university, etc). It's insecure (no PIN required) and if you loose your card the money's gone. It also (I think...) doesn't require a live connection to the ATM network, so transactions can be run later

* Giro. Giro is the opposite of a check (it's a credit-transfer instead of a debt-transfer). Sometimes bills are sent with a GIRO slip, which the payer fills out and eventually makes it way to the payer's bank, where a transfer is initiated to the recipient. I've never used a GIRO in the 2+ years I've been here.

BBC News - Cheques to be phased out in 2018

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