To understand what is going on here, you have to remember that a couple of years ago the UK Payments Council put forward the suggestion that around a decade from now, the cheque clearing system should be abandoned. They did not, as is sometimes said, say that cheques should be banned. There is nothing to stop anyone at all from offering their own cheque system. But the Payments Council said that given the decline of cheques in the UK, it made sense to plan for their subsidised end. Hardly radical, you might think. There are many countries where cheques are a distant memory. No-one in Scandinavia has used a cheque for years. And even in the UK I note that while both of my sons have bank accounts, they have never had chequebooks and I cannot imagine that they ever will. Even the British Chamber of Commerce last year called for the industry to scrap cheques and move to electronic invoicing and one of their reasons for calling for the ending of cheque clearing was the negative effect of the use of cheques on other businesses' cash-flow, apparently the opposite of the Chancellor's vision for a payment system forged in the white heat of new technology as a platform for the future.
So why does the Chancellor think that paper cheques are a new and better service that the banks should be incentivised to provide? Even the most rudimentary analysis of the economics would reveal that cheques are a waste of time and money. I wonder if it is rooted in demographics? Newspapers such as The Daily Mail and The Daily Telegraph focused on the plight of the elderly who would be unable to pay their cleaners or their gardeners without cheques. I don't want to sound too middle class about this, but I pay my cleaner and my gardner using the faster payment service (FPS) via my Barclays mobile banking app and I don't think it is beyond the bounds of the imagination to think that a Barclays smart television app might fulfil a similar function for my Dad.
But if the Chancellor is right, and cheques are the future, here's my suggestion. Why don't the people who want to keep cheques pay for them and leave the rest of us alone. The chequists could band together and form a joint venture. They could obtain a Payment Institution licence and run their own cheque system. Which set me thinking - how would it work? If you were to design a cheque system starting now, you wouldn't bother with magnetic ink and OCR, you'd design it for an app world from the beginning. So that you can "write" a cheque on your mobile or your PC or your telly and it displays a QR code than can be scanned or printed out and posted. When the gardener and the cleaner gets the "cheque" in the mail or via e-mail, they can then scan it using their mobile phone and have the money transferred to their account.
This is just of the many ideas I have for the Chancellor, so I would appreciate all of your support in trying to convince him to make me the UK payment supremo, the head of the soon-to-be-created regulator for the payments industry, PayCom. I offer a progressive campaign that will not only see cheques at the heart of UK plc for all time but will also see the Queen's head on currency replaced by Dot Cotton from Eastenders, the introduction of a 99p coin so that we don't end up with all those pennies in our change and a £1,000 note that will persuade the world's drug dealers and money launderers to stop making indefinite interest-free loans to the Federal Reserve and the European Central Bank, and make indefinite interest-free loans to the Bank of England instead. Only one of these ideas is stolen from an old manifesto from the Monster Raving Looney Party, by the way. I'm all about the future.
Barclays Bank says it will begin pilot trials of remote cheque deposit technology 'early in the New year'.[From Finextra: Barclays to pilot mobile cheque deposits as UK Government proposes rule change]
Ahead of Christmas, Barclays is giving one million customers the ability to pay in cheques remotely by taking photographs with their phones. Barclays has been piloting the service with a few thousand customers since June, when the UK government decided to push ahead with legislation that lets banks and building societies process cheque images - rather than the physical paper - for the first time.
With the technology getting a positive response from customers - 90% say that it enables them to do everything they want - it is being rolled out to one million Premier Account holders[From Finextra: Barclays extends cheque imaging pilot to one million customers]
The British government (inexplicably) want “cheques to have a crucial role in the ongoing success of the UK”. I don’t understand why and I strongly suspect they don’t either.[From Cheques and checks are both going nowhere]