[Dave Birch] I was following NACHA’s Payments 2012 conference through twitter correspondents such as Jonathan Williams (@jmlw1) and I saw a discussion about the UK’s approach to cheques. This reminded me of a domestic incident from last week. My eldest son got a letter from a government agency. He read the letter through then came in to ask me what it was, since he couldn’t tell whether they were asking him for £50 or giving him £50. To me, the clue was the printed cheque. But to him, the tear-off section at the bottom of the letter didn’t mean anything. He doesn’t have a cheque book and although he has, on occasion, received cheques, he had never received a computer-printed cheque like that. So I told him it was a cheque, a refund for a cancelled service. He asked why they had sent him a cheque: he had paid online using a debit card, so why couldn’t he be refunded back that way instead of the money being wasted on paper and postage and, worst of all to him, the chore of having to go to a bank branch to pay it in.

cheque_bill_redacted

I had no explanation. I haven’t the slightest idea why a government agency would waste money printing out and posting a cheque. As far as I’m concerned, it should be illegal for government agencies to use cheques at all, but there you go. Cheques are astonishingly persistent given the cost and inconvenience they embody. The argument that there are no alternatives is a bit thin, given the variety of alternatives available. Yet we see, time and again ,heart-rending pleas to The Daily Mail from people who cannot think of another means to pay their gardener. In cases where the gardener turns out to have a bank account, a prepaid card or a mobile wallet, charities can be relied on as a trump card.

If cheques go then genuine charities should be given free transfer by card or someone should think of another method of paying small amounts at no cost

[From Plans to phase out cheques should be scrapped, say MPs – Telegraph]

Of course, there is already a method of paying small amounts at no cost in the UK, which is the Faster Payment Service (FPS) and, as the Barclays PingIt service clearly demonstrates, a mobile front-end to FPS serves this purpose perfectly. The stupid affection for cheques reflects a much wider problem in society.

The pain that quantitative easing has caused pensioners and savers should be offset by government compensation, a report by MPs has said.

[From Compensate pensioners for savings lost to QE, say MPs | Money | The Guardian]

This crazy plea for inter-generational transfer comes from the same Treasury Select Committee that went medieval on the Payments Council for suggesting that they might end cheque clearing in a decade. But why? It’s because retired people vote. (According the HMRC figures that I found, the average wealth of someone under 44 is around £140,000 but the average wealth of someone over 65 is heading for twice as much.) Hence they generally vote to load costs on those of working age, and cheques are just another example of this. But it doesn’t have to be this way.

At the excellent Payments Council / Intellect annual event “Driving Change in Payments“, I saw a terrific presentation from Professor Andrew Monk from the eightysomething project talking about the research project on Banking for the Older Old. He’d been doing work on the co-design of banking products for the elderly and had a number of real insights into what is required to address the real problems of an ageing population. He noted, for example, that one reason why elderly people like cheques is because of their audit function: the cheque stub. He also noted, for another example, that another reason they like cheques is because they only need to know the name of the payee and not any of their bank details.

We need to find ways to address these requirements. I couldn’t care less if I never see another cheque, and nor could my son but remember that the Payments Council doesn’t want to ban cheques, and nor do I. It wants to end cheque clearing, which is entirely different. There is a clear opportunity here for someone to create a near-bank, a payment institution with a prepaid account and access to other regulated financial services, that is specifically designed for the elderly. There’s no reason that such a near-bank couldn’t offer cheque-like paper instruments (giro payments, essentially) for the elderly. The great advantage of this is that people who wanted to use such a system would pay for it, that everyone else would save a great deal of money by getting rid of both cheques and cheque clearing.

Incidentally, by far the most interesting part of Andrew’s presentation (to me) was the section about the desperate need to find mechanisms for delegation, so that older people can delegate authority for specific financial services-related task to friends and family members. This is, of course, an identity problem rather than a payment problem and I promise that I will return to it soon.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers


2 comments

  1. In theory you can cash cheques without having a bank account which makes them inclusive and even private to your debtors. The government already relies on banking criminals for 97% of the money supply, and it will be inappropriate for the government to compel me to have a bank account for tax rebates.

    The ‘personal opinions’ expressed in this blog always seem to revolve around the technological fix. No surprise coming from a technology implementer. How about you broaden your scope a little and make this blog more interesting.

  2. I apologise for making the blog too boring Matthew, but the reason that it revolves around the “technological fix” is because I think that is what is required. Nowhere did I suggest, by the way, that anyone should be compelled to have a bank account, because I don’t think that.

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