Cheque alternatives still sought, says banking industry
A new "paper-based" method of payment could be introduced if cheques are abolished in 2018, the banking industry has said.
The system could be put in place to help those who struggle with new electronic alternatives to the cheque.
The Payments Council said the cheque clearing system would only be closed once acceptable alternatives had been devised.
A year ago, it announced plans to phase out cheques in the UK.
Since then it has come under pressure, especially from charities and the elderly, to justify the plan which would see cheques disappear by 2018.
The body, while sticking to its aim, says cheque facilities will stay until new payment methods have been adopted.
"Cheques will continue until alternatives are in place," promised Paul Smee, chief executive of the Payments Council.
The use of cheques has been in steady decline and the banking industry wants to manage that decline rather than let the use of cheques dwindle in a disorganised manner.
Its plan has proved controversial, especially with charities whose donations come mainly via cheques and with older people who are the heaviest users of cheques and who still rely on them rather than on telephone or internet banking.
Among the possible alternatives that are being explored are a new paper voucher system for those who still want a non-electronic method making a payment.
And new electronic methods, such as using mobile phones to send money by text message, or using mobile phones as debit card readers, are also being looked at.
This received a mixed response from representative groups.
John Walker, national chairman of the Federation of Small Businesses (FSB), said: "The FSB is pleased that the banks are looking at an alternative paper-based system to replace the cheque.
"Cheques are vital to the way many consumers and businesses operate, and with millions of cheques written every day, many small businesses will be disadvantaged - especially in rural areas - if the cheque is to be completely abolished."
Michelle Mitchell, charity director at Age UK, said: "The announcement does nothing to reassure older people that an acceptable alternative payment system will be in place before cheques are withdrawn.
"Cheques should remain available to all customers until an acceptable alternative which meets the needs of all who rely on cheques is in operation."
The industry admits it has a long way to go to explain to the general public what is happening.
The Payments Council's own research has shown that 55% of people are still unaware that the cheque clearing system may close in 2018.
Of those who do know it is going to shut, 25% think this will happen in 2011 or 2012.
In fact, 30 June 2011 is the date from when cheques will no longer be guaranteed by plastic guarantee cards.
In the past year, the Payments Council has been consulting more than 300 groups of cheque users representing individuals, charities, and businesses.
Those consultations will continue and a final decision to switch off the conventional cheque clearing system is scheduled to be made in 2016.
However, if the 2018 target date is deemed not feasible, either in 2016 or at an earlier review date of 2014, then the plan could be revised or the implementation date moved.
The Payments Council stressed that alternatives to the cheque will have to be not only in existence but also "available, acceptable and widely adopted".
"We have set ourselves a massive challenge," it said.