The Payments Council announced in late 2009 that checks are to disappear in the UK by 2018. To most people this might feel like a case of, sowhat? Particularly for corporates, where the use of checks is dramatically less than say a sole trader or SME. So what impact will this have for corporates?
Companies of all sizes will be affected in some way or another by the removal of checks, even if this is only a cultural impact as opposed to a business impact. One thing that must be remembered is the check is still a legitimate mechanism to make certain types of financial transactions and still remains the only secure way to send payments in the post.
For corporates, BACS is readily available, but how many companies want the option that immediate electronic payment brings? The check, because it is paper based and manual is seen as something you can ‘legitimately’ delay, which again goes back to the cultural change that will need to take place for checks to be removed successfully.
With many companies already using automated check printing solutions, the reason for migrating from two payments systems to a simple system e.g. BACS, is the efficiency that can be gained including the removal of the additional capital and costs associated.
Projections show that in 2018 there will be an estimated 600 million checks being written compared with 1.4 billion in 2009, these statistics alone suggest that checks might be becoming less popular, but could still be in use around the Payments Council deadline in 2018.
I guess that everyone in the UK has an account that can be credited with a payment? Not true for everyone in the US. Anyone have any data that documents how many people are “unbanked” in the U.S.?
Could it be that some do not want to be “banked” because they believe they will be abused if they have an account (sad but true)? What a terrible situation exacerbated by the current grilling of Goldman Sachs (and they are not a typical commercial bank with retail accounts – in fact Lloyd Blankfein had to remind Congress in his opening statement that most people do not know what they do) but the public understands that GS is being called a “bank” – one that is called “dumb but decent or smart and sleazy” per the NY Times. So is the US version of the Payments Council thinking of similar action?