Soon there will be no more cheque guarantee cards and that is a fact. This can cause enormous repercussions to the retail industry because there will be no systems in place to verify cheques. This means that bouncing cheques will not be covered, and those businesses that need to accept them will inevitable lose money. Fraudsters are sure to want to take advantage of the phasing out of the cheque guarantee card, so SMEs (Small and Medium Enterprises) better take advantage of the other payment processing methods available to them and decide which is the lesser of two evils: pay the price of a bounced cheque, or pay the merchant service fee associated with payment processing costs.
Customers and retailers will have the choice
When Santander started phasing out cheque guarantee cards in March this year they continued to allow their customers to write cheques without the guarantee to those retailers and merchants who will still accept; or those who are forced to accept them due to the absence of debit and credit card processing equipment.
Santander decided to begin the transformation in March simply to make the change a little easier on their customers and the retail industry. It’s probably just as well that a major bank like this has taken this decisive step in order to lessen the impact on the retail world.
Although cheque payments amounted to less than 1% of retail transactions in 2009 according to the report by the British Retail Consortium (BRC) this can still have quite a profound effect on those who are semi dependent on cheque payments due to the lack of more modern Chip and PIN machines.
Tall task for the banks
When it comes to the phasing out of the cheque guarantee card many people have forgotten the effect this will also have on the banks and the extra work that needs to be done. This is another reason why Santander commenced their transference in March this year, ahead of most other banks. When you consider that all those cheque guarantee cards out there belonging to their customers will have to be replaced, it’s just as well an early start has been made. According to a BBC report, a Santander spokesman reported that there would be around “five million debit cards” that would need to be replaced. If you consider the effect this would have if all the banks in the country decided to do this at the same time it could become quite chaotic.
The move to alternative payment processing
This is yet another decisive step on the road to a future of alternative payment methods. All the methods are out there already, and many SMEs are using debit card machines and online merchants are accepting web payment via credit cards etc, it’s just a case of the individual SME taking the next step and choosing which way they want to go. It basically comes down to credit payment processing or cash, and in a retail world that seems to be moving away from cash payments there would seem to be only one logical choice.
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Not all transactions where cheques are currently used are between customers and businesses. Cheques are used between individuals and many people , particularly the elderly use cheques to send donations to charity. Charities are having a hard enough time at the moment without this further obstacle being put betwen them and potential donors. At the moment it is only the cheque guarantee card that is being phased out but this must surely sound the death-knell for the cheque itself