Cheque elimination in UK

In the UK the first major move of the Payments Council, in 2009, was to agree to a target of 2018 for the closure of cheque clearing in the UK.

The Payments Council was an organisation of financial institutions in the United Kingdom, which set a strategy for UK payment mechanisms from 2007 until 2015.

In April 2015, the regulatory powers of the Payments Council were transferred to a new body, the Payment Systems Regulator, set up by the Financial Conduct Authority.

On 29 June 2015, the Payments Council was then relaunched as the trade association Payments UK.

Payments UK was a trade association for financial institutions, technology firms and payment processing companies in the United Kingdom. It merged with several other British financial organisations in July 2017 to form UK Finance.

The Payments Council advised a Treasury Select Committee inquiry in February 2010 that cheques were in “terminal decline”, down to 3.5 million per day in 2009 from a peak of 11 million in 1990.

After lobbying from the charity sector, the Council reaffirmed in October 2010 that the 2018 closure is conditional on adequate alternatives being in place by 2016.

However, in April 2011 the Select Committee reopened its inquiry into the 2018 target date, after receiving a large volume of correspondence from small businesses, voluntary organisations and older people who were still using cheques.

The chairman of the inquiry stated, “The Payments Council has not thought through its arguments carefully enough and its first piece of work on the cost–benefit of abolishing cheques was clearly defective.”

The Payments Council welcomed the opportunity to reassure the public that cheques would not be abolished before acceptable alternatives were available.

On 12 July 2011 the Payments Council announced it had cancelled the 2018 target date to close cheque clearing and that cheques will remain as long as customers need them.

In the UK, the number of cheques used to make payments has continued to decline.

Both businesses and consumers continue to choose alternative payment methods instead of using cheques. Cards and remote banking transfers are increasingly being used where previously a cheque may have been written. Despite this decline cheques remain valued by those who choose to use them, as they provide a convenient and secure method of paying someone when you do not know the recipient’s bank account details.

The Image Clearing System (ICS) was introduced by the Cheque and Credit Clearing Company in October 2017 and fully rolled out in September 2019. One of the main benefits of this is the cheque clearing process will now complete much faster, so cheque recipients will see the money appear in their account more quickly. It also allows for cheques to be deposited via a mobile phone with a camera (using mobile banking services).

Despite this introduction, cheque use continues to decline across the UK and is expected to continue to do so over the next decade, reaching 70 million payments in 2031.