2018 target date set for closure of central cheque clearing

16 Dec 2009

Today (16th December 2009) the Payments Council Board has agreed to set a target date of 31st October 2018 to close the central cheque clearing.  Cheque use is in long-term, terminal decline. The Payments Council was faced with the choice of either managing the decline to ensure that personal and business cheque users have alternatives easily available to them; or to stand back and let the decline take its course. It has decided that its active involvement can help prevent confusion and deliver cheque alternatives that are acceptable to cheque users. The Payments Council wants to ensure that consumers and businesses are not left high and dry when the closure of the clearing occurs.

Over the next nine years the Payments Council will seek to promote and explain existing alternatives; and where innovation and new options are required to ensure that they are put in place. Although cheque use has been in decline since 1990, and has fallen by 40% over the last five years, there are still plenty of situations where cheques are used extensively. These include payments between individuals, and payments to sole traders, small businesses, clubs, charities and schools.  The payments industry has to rise to the challenge of finding easy-to-use efficient alternatives for these payments and to ensure that they are easily accessible and well understood by cheque users. The goal is to ensure that by 2018 there is no scenario where customers, individuals or businesses, still need to use a cheque. The Board will be especially concerned that the needs of elderly and vulnerable people are met.  The next step is to identify targets which the Council can measure progress against. It will undertake a full review in 2016 before any final decision is taken.  

Chief Executive of the Payments Council, Paul Smee says:    

“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 extensive work that we need to do to ensure that everyone has a viable alternative, should the 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.”    

Today’s decision follows 18 months of extensive consultation and research to understand fully 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, and small and corporate business users of cheques. Feedback from all these groups showed that the vast 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. This is why we have set the 2016 review date.    

Smee added:  

“We have already done a significant amount of work, research and consultation which has convinced us that 2018 is achievable.  But the real challenge lies ahead if we are going to be comfortable to wave good-bye to the cheque, which undeniably occupies a unique place in British culture. 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.”    


For further information, contact the press office on any of the following numbers:  

020 7711 6234/6340/6251/6316 or press@ukpayments.org.uk.   

Someone will be available for broadcast interviews and arrangements can be made by ringing 020 7711 6368    

The Payments Council is the organisation that sets strategy for UK payments.  It has been established to ensure that UK payment systems and services meet the need of users, payment service providers and the wider economy.  

The Payments Council has three core objectives: to have a strategic vision for payments and lead the future development of co-operative payment services in the UK; to ensure payment systems are open, accountable and transparent; and to ensure the operational efficiency, effectiveness and integrity of payment services in the UK.   

The Payments Council is a membership organisation funded by its members, with an independent chairman. It was set up in March 2007 and currently has 25 members; on the Board sit 11 banking representatives and four independent Directors as well as the chairman. Those four Directors can collectively exercise a veto over Board decisions.  The principal UK payment schemes – Bacs, CHAPS and Cheque & Credit Clearing Companies, LINK Scheme as well as the UK Domestic Cheque Guarantee Card Scheme, the Belfast Bankers' Clearing Company Limited and the Currency Clearings – have entered into a contract with the Payments Council which sets out their respective rights and duties towards each other. Under the contract, schemes are required to report regularly to the Payments Council Board: the Board is able to make decisions that are binding on scheme members in order to implement its strategy.  Payments Council also has 10 associate members.  

The Payments Council committed to review the future of cheques in its National Payments Plan (published in May 2008). The task was to review whether a target date can be set for closing the cheque clearing in 2018.  The cheque and credit clearing is the centrally managed system that enables cheques to be processed between all the banks and building societies who issue cheques, banker’s drafts and building society cheques. There are three exchange centres covering England and Wales; Scotland, and Northern Ireland. The cost of processing cheques for banks in 2008 was £1.4 billion.     

Time line key cheque facts    

  • 1990     Peak year for number of cheques – 11 million cheques written per day.
  • 2007     Industry-wide maximum cheque clearing timescales launched. Known as 2-4-6, these provided clarity on timescales and for the first time customers got certainty on their cheque funds.   
  • 2007-8     Vast majority of major UK retailers start to stop accepting cheques.
  • Just under four million cheques are written each day, compared to 14.8 million debit card payments.
  • In 2008 each business wrote on average around 50 cheques per month and received around 1,080 cheques per year, whereas each adult wrote 1.2 cheques per month on average and received just 5 per year. 
  • 45,000 trees were cut down to make cheques.
  • 2009     350th birthday of the cheque.
  • 54% of adults (26 million people) still write cheques with 48% of adults receiving a cheque in the last year.
  • Decision taken on closing the Cheque Guarantee Card Scheme.
  • 2011     Cheque Guarantee Card Scheme to close on 30th June.
  • 2016     Payments Council to take go /no-go decision on closing cheque clearings.
  • 2018     31st October. The target end date for closing the central cheque clearing.