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With the rise of contactless payments and digital transactions, it is perhaps unsurprising that many people don’t use their chequebooks as often as they used to.

The Cheque and Credit Clearing Company (C&CCC) figures indicate a 60% drop in the number of cheque payments made in the UK between 2014 and 2020. The steady decline in cheque usage would suggest a proportional decline in cheque printing.

However, the paper cheque does still play an important role in money transactions, for both businesses and private individuals. With a seemingly lower risk of fraud compared to electronic transactions, and cheque printing technology now readily accessible to anyone, is check printing really on its way out?

Decline is Levelling Out

Despite the steep decline in cheque payments since the late 90’s, recent changes to the way cheques can be processed have seen that decline level-out.

The number of cheques processed by Pay.UK increased slightly year-on-year, totalling 257 million in 2019. This is predominantly due to cheques now being cleared as images rather than as pieces of paper, with the result that more cheques are now cleared centrally rather than within banking groups.

Lower Risk of Fraud

Digital payments are far from universally trusted and are often vulnerable to fraud, cyber-attacks, and power failures. According to the Financial Times, in 2020, cheque fraud totalled just £12.3m on £185m transactions. Whereas online authorised payment scams totalled £479m in £4.1bn online payments.

With major banks recently introducing Image Survivable Features (ISF) to cheques as an additional layer of fraud protection, the security of check payments has been enhanced even further. 

Digital isn’t for Everyone

While the Millennials and Gen Z population are driving the adoption of contactless payments,  the elderly and vulnerable, in particular, tend to believe cheques are more reliable than electronic or digital transactions. There are no pin numbers to remember, and no need for 20:20 vision to read numbers on a screen.

The payments industry had announced in the early 2000’s that the chequebook was to be consigned to history by 2018. Many argued, however, that paper-based forms of payment such as cheques should not be phased out until suitable alternatives for older people were introduced, making the case that more mature people are not comfortable using new technologies.

In December 2009, the board of the United Kingdom Payments Council set 31^st  October 2018 as the date when paper cheques would be completely phased out in the UK. The Payments Council believed that with the public using fewer cheques every year, and with the emergence of mobile checking and other electronic forms of transferring money promising to appear in the years to come, cheques could easily be eliminated within a decade.

But things didn’t go quite according to plan.

The Payments Council’s announcement was soon met with opposition from various groups, especially those representing the elderly. They wanted a guaranteed paper-based alternative, which would defeat one of the main purposes of getting rid of cheques in the first place: their high processing cost (about £1 per cheque). Charities were also unhappy, fearing a major reduction in donations if cheques were eliminated because of what they said was an ingrained U.K. culture of charity cheque-giving.

In July 2011, the Council withdrew< its 2018 date, proclaiming that “cheques will continue for as long as customers need them.” 

Small Business Payments

Many businesses, particularly small companies or start-ups, may not have the facilities in place to process electronic or online payments. Receiving a cheque as payment is easier for them as they can leave the processing end of things to the bank.

A recent survey of 1000 businesses in the UK by the Cheque and Clearing Company showed that over half of those surveyed are still making and receiving payments by cheque. When questioned why:

• 30% deemed cheques the most familiar method
• 29% stated that it was easier to manage cash flow through cheques
• 25% revealed that the payee requested cheque payment
• 21% stated that money, processed through cheques, leaves their account slowly

Most electronic payments are instantaneous, meaning they leave a company’s bank account as soon as payment is made. For smaller companies, who may have cash flow issues, paying by cheque means the funds will leave their bank account slower and they have some leeway.

Cheques may Widen a Company’s Customer Base

Even if a company has the facility to process electronic payments, by indicating a willingness to accept cheques, they are increasing the number of potential customers. If they shut off one particular avenue of payment, they may be turning business away as many people are still more comfortable paying by cheque.

Time to Cheque out?

Far from it! Although cheque usage has fallen dramatically over the past decade, many consumers and small businesses in particular are in no rush to get rid of their chequebooks just yet.

With the hesitance over security issues of electronic payments; the convenience of cheque payments for small businesses and charities; and the advent of mobile cheque imaging, it seems the humble paper cheque has proven remarkably resilient in the face of rising paperless payment technologies.

Only time will tell if cheque printing will cease to be a requirement in decades to come, but for now at least, it continues to be a fundamental pillar of the financial landscape.

A1 Cheque Printing

A1 has been providing a secure cheque printing service for the UK and overseas markets for over 40 years.

A1 were amongst the first security printers to be accredited for cheque printing by C&CCC, a standard set up with the aim of tackling fraud involving company cheques by ensuring that all cheques for use in the UK clearing system are produced by accredited cheque printers, who have adopted only the highest security standards.

Get in touch to find out more about our secure cheque printing service.