It’s been called ‘even worse than a colossal error of judgement’, it might be the death of a system that’s worked for over 300 years, and is certainly a PR disaster, but why is there so much fuss over the Payments Council’s decision to set a target end date of 2018 for cheque clearing?
Surely with everything else going on – rising inflation, cuts in social care, NHS reform, pensions reform etc – there are more important things to worry about? After almost a year of research I think it’s because cheques have become a symbol of frustration that we can’t access our own money in a way which works for us, but increasingly have to pay for services we don’t really want, or give up our security in order to get at our cash.
Research published by Age UK today, ‘The Way We Pay: Payment services and financial inclusion’ asks (i) what payment services we need to have access to in order to be financially included; (ii) what can be learnt from other countries and industries – is technology the answer; and (iii) what is the role of Government, do we need a universal service obligation?
We found that already nearly 1 in 5 people aged 65+ do not withdraw their day-to-day spending money themselves, but use someone else to do so, just 52% of people of all ages did not write down their PIN or tell it to someone else, and 11% of people aged 75+ who have a Chip & PIN card do not find it very easy to use. Even with cheques, many people don’t have payment systems and services which allow them to lead independent lives.
Payment systems are a utility, like water or electricity – you don’t appreciate them until you don’t have them and when they’re gone you’re in trouble. But with other utilities you have a range of protections, in payments we’re relying on a voluntary member-based body, the Payments Council.
The Payments Council has now made it very clear that no decision has been made yet and that cheques won’t be phased out unless there is an alternative which meets the ‘4 A’s’: accessibility, awareness, acceptability, adoption.
We welcome the Payments Councils commitments, the Treasury Select Committee’s role in securing them and the Financial Secretary’s promise to intervene if necessary, but we’re worried that past performance of the payments industry in designing solutions that work for everyone isn’t good.
Although our research didn’t discover a single magic solution, we did find many ways in which existing payment systems can be improved and in which new technologies, such as mobile banking could be designed to meet the needs of older people. We are looking forward to helping develop solutions and seeing some concrete improvements.