Banks lump on a processing fee for cashing cheques on business accounts, because of the hassle involved converting them into ‘money’. Add to this figure the cost of travelling to your bank and the opportunity cost of not doing constructive work and…well it all adds up.
But it’s no laughing matter for finance houses either. Electronic payments are four times cheaper for them than cheques, which cost about £1 each to process.
So prepare to gasp or cheer (or neither) at the news that the days of the humble paper payment could be numbered. Banks are meeting today to decide when your cheque book is to become obsolete.
According to today’s Times this could occur within eight years. It says the Payments Council, a body comprised of bank folk set up to deal with such questions, blames “habit and inertia” for relying on the 350-year-old payment method.
Matthew Goodman at the Forum of Private Business (FPB) says that cheques have become an increasingly expensive option for businesses. While half of the FBP’s members still rely on cheques, he feels that the move can be “relatively painless". Goodman urges small businesses to use the current publicity to pressure banks into coming up with simple and convenient alternatives to the cheque. “The Payment Council has said it will only take a final decision to phase out cheques in 2016 if it is satisfied the banks have put viable alternatives in place,” he adds.