Payments Council evidence shows minimal impact of Cheque Guarantee Card Scheme closure on consumer and business cheque use
Tweet8,400 consumers and businesses surveyed, amongst whom 1,100 consumers and businesses interviewed as users of guaranteed cheques
Following on from its decision that cheques will stay, the Payments Council today (Tuesday 20 December) confirms that its research to assess the impact of the closure of the Cheque Guarantee Card Scheme on consumers and businesses provides clear evidence that no case exists for reinstating the Scheme. The research, carried out by the independent research company, Synovate, shows that cheques are continuing to be used as they were before 30 June 2011, when the Scheme closed. The findings have been shared with key consumer and business representatives, as well as the Treasury Select Committee, who had previously called for the Scheme’s closure to be reconsidered.
Following up on the research results, next year the Payments Council will review what practical steps can be taken to help the minority of businesses who no longer accept cheques or find existing alternatives unacceptable. In addition, the Payments Council will work with representative bodies to run a campaign specifically aimed to reassure older people that cheques will remain and to explain other ways to pay.
Adrian Kamellard, Chief Executive of the Payments Council comments:
“We’ve committed that cheques are here to stay, so we were pleased that the demise of the guaranteed cheque has had little impact on the way people use cheques, nor has it stopped businesses accepting them. It’s particularly reassuring to find that older people have taken the change in their stride, however, our research has highlighted that there is a small minority of customers and businesses who might need extra help – so that will be what we’re focussing on next.”
Key points from the research show:
Consumers
- 6,644 consumers were contacted; 600 of whom were users of guaranteed cheques and able to participate in the survey.
- 88% of guaranteed cheque users report that since Scheme closure, cheques continue to be accepted in all those places where they’d used the guarantee. Only one in eight of those who had used a guaranteed cheque to pay a business in the past 12 months (representing one in a hundred of all UK consumers) said that any of those businesses had decided to no longer accept a cheque.
- The research showed that although a slightly higher percentage of those 65 and over used their cheque guarantee card (12%, compared with 9% of under 65s), older people were more likely to have a cheque accepted without being asked for the guarantee. Only half of those aged 80 and over said they were expected to show their cheque guarantee card, compared with 66% of those aged 64 or younger.
- 43% of consumers who had used their cheque guarantee card in the past 12 months were unaware that the Scheme had closed. This suggests that, either consumers were using the Scheme only on rare occasions, or that they have not experienced businesses refusing to accept cheques since closure of the Scheme.
- Scheme closure has led some consumers to change their payment behaviour. 91% of guaranteed cheque users are now using debit cards (previously this stood at 88%) whilst there is also an increase in cash use (now 88% up 0.6%). Increase in cash use has been lower amongst older people.
- The research confirmed that guaranteed cheques were often used incorrectly: 40% of those who formerly used them said that they had posted a guaranteed cheque, though the guarantee only be applied when payment was made in person.
Businesses
- 1,757 business were contacted; 501 of whom accepted guaranteed cheques and were able to participate in the research.
- Only 1 in 501 of the businesses who accepted guaranteed cheques before closure reported any detrimental impact on their business.
- 84% of businesses still accept cheques without the guarantee.
- Only 3% of businesses have stopped accepting cheques solely due to the Scheme’s closure. A further 2% have stopped accepting cheques partly due to Scheme closure and partly due to other reasons, and 11% have stopped accepting cheques entirely down to other reasons.
- Of those few businesses (5%) that have stopped solely or partly due to Scheme closure, 60% said that they will still accept cheques from known customers or whose address they know.
- 88% of businesses that have stopped accepting cheques in the past year either because of the Scheme or not, accept debit cards.
- Only 5% of those reported any customer complaints.
The Payments Council took the decision to close the Cheque Guarantee Card Scheme in June 2009 following 20 years of declining usage and after consulting with consumers and businesses still using it. Since the Scheme’s closure - which does not stop businesses accepting cheques, or customers from writing them - statistics show that cheque volume trends remain unchanged.
View the briefing summary here.
ENDS
For further information contact the Payments Council press office on 020 3217 8234/8340/8441 or email press@ukpayments.org.uk
NOTES TO EDITORS
About Payments Council
The Payments Council is the body with responsibility for ensuring that payment services work for all those that use them in the UK. This unique role ensures that we listen to a wide range of stakeholders to drive innovation in payments and implement change so that individuals and businesses have access to payments for their current and future needs. We are, by nature, a collaborative body so we work with the financial institutions in the payments industry as well as listening to the voices of our external stakeholders. The Payments Council has three core objectives: to have a strategic vision for payments and lead the future development of co-operative payment services in the UK; to ensure payment systems are open, accountable and transparent; and to ensure the operational efficiency, effectiveness and integrity of payment services in the UK.
The Payments Council was set up in March 2007 and currently there are 31 members; the Board has 11 industry representatives, four independent Directors and an independent Chairman. The principal UK payment schemes – Bacs, CHAPS and Cheque & Credit Clearing Companies, LINK ATM Scheme as well as the Belfast Bankers' Clearing Company Limited – have all entered into a contract with the Payments Council to set out their respective rights and duties. Under the contract, schemes are required to report regularly and the Payments Council Board is able to make decisions that are binding on scheme members in order to implement its strategy. Payments Council also has 23 associate members.
The Payments Council announced on 12 July 2011 that cheques would be remaining as long as customers need them.
The research undertaken on the businesses who accepted guaranteed cheques and consumers who wrote them was undertaken in October and November 2011 by telephone interviews with 501 businesses and 600 consumers. It was conducted by Synovate, an independent market research company.
For more information visit www.paymentscouncil.org.uk
Q&A for the end of the Cheque Guarantee Scheme
What was a guaranteed cheque?
They were used when paying retailers or businesses to guarantee a cheque up to £50, £100 or £250. For a cheque to be guaranteed it had to be physically handed over with a card carrying the Shakespeare logo or hologram and the retailer had to ensure they comply with the conditions of the Guarantee Scheme.
Why was the decision taken to withdraw the cheque guarantee facility?
The use of guaranteed cheques fell dramatically over the past twenty years and following extensive consultation with businesses and customers, the Payments Council decided that it would be better if its decline and demise was coordinated by setting a closure date. As well as groups representing cheque-accepting businesses, the Payments Council invited key consumer groups to submit their views. This included Help the Aged (now known as Age UK), Consumer Focus, Which? and similar representative bodies.
Can I still write a cheque without the guarantee?
Yes. Withdrawal of the cheques guarantee scheme in does not mean the end of cheques: you will still be able to write them and businesses will still be able to choose to accept them.
Does this decision mean the death of the cheque is more likely?
No. the Payments Council scrapped its decision to set a target date of 2018 to scrap cheques and banks are committed to continue to provide cheques whilst customers still need them .
Where can I learn more about alternative payment methods?
You can visit the Pay Your Way campaign website at www.payyourway.org.uk
Does this mean that the Scheme is definitely not being reintroduced?
Payments Council Board has reviewed the independent market research undertaken and agreed that this does not support the reintroduction of the Cheque Guarantee Card Scheme. Work will be undertaken to improve payment options and information about payments.
Has the Treasury Select Committee fed back to you their opinion of the research?
No. They will want to review the detailed research report.
Can I see a copy of the full research and, if so, where?
The full research is published here or available from the press office (t: 020 3217 8368)