I note that the UK is moving in a gingerly fashion towards abolishing paper cheques. The Payments Council, an odd quango that is responsible for selling the idea of phasing out cheques by 2018 is already ruffling feathers among small businesses and older people.
Coincidentally, the Bank of England Museum held a party this week to commemorate the signing of the first cheque (or check, as the Americans have it) 350 years ago.
“During the 17th century, bills of exchange started to be used for domestic payments. Cheques, a type of bill of exchange, then began to evolve and on 16 February 1659, one of the earliest handwritten cheques known to be in existence in the UK was written. It was made out for £400, signed by Nicholas Vanacker, made payable to a Mr Delboe and drawn on Messrs Morris and Clayton, scriveners and bankers of the City of London.”
Being invited to the party did not mollify the Forum of Private Business, which says small businesses still need to use cheques.
I have two comments on the National Payments Plan document produced by the Payments Council, which suggests the elimination of cheques.
One is that it is written in bureaucratese, which serves the purpose of hiding what it is saying and reducing the chances of people protesting.
Opportunities for encouraging efficient means of making payments and for moving away from the less efficient and more costly ones should be identified. In particular, we see a move to electronic payment systems, away from paper-based forms of payment, bringing a benefit to the economy as a whole.
In other words: we want to get rid of cheques.
My second observation is that the plan has interesting statistics on how the British make payments these days. Cheques have fallen to only one in 25 payments, with their use having peaked at 4bn payments by cheque in 1990.
Debit cards, credit cards and automated payments accounted for 34 per cent of payments in 2006, with cash being used for 63 per cent of payments.
I wonder what the statistics are for the US, which strikes me as still being almost absurdly reliant on making payments by cheque. Bernie Madoff, for example, was found with $173m worth of cheques in his top drawer. If he had used electronic banking, the Feds might not have caught the money.