Cheque guarantee cards are being phased out on 30 June, with implications for smaller businesses and charities. And while it doesn’t mean you can’t pay by cheque – is it really the best option?
These days, fewer of us write cheques for our everyday purchases – but in their heyday, we made billions of cheque payments annually using our cheque guarantee cards.
The retailer would take your completed cheque, write your card details on the back and the payment would be guaranteed – typically up to £100 or £250.
But this system is set to become history as all cheque issuers withdraw the cheque guarantee system on 30 June.
The writing has been on the wall for some time. These days, just 7% of cheques are guaranteed by card, and that’s a figure that’s declining.
And cheques themselves have seen a large drop in popularity over the last two decades. Just 1.1 billion cheques were written in 2010, compared with 4 billion twenty years previously.
Sandra Quinn, Director of Communications at the Payments Council, explains further: “The use of cheque guarantee cards has been in a steady decline, and many of them were written in situations where the guarantee was void.”
An example of this would be if a guaranteed cheque was sent by post – the payee needed to write down the guarantee number for it to be valid.
The phasing out of the system is unlikely to have much effect on retailers, supermarkets or petrol stations – most of whom have already phased out the use of cheques.
Alternative ways to pay
However, there will be some small businesses and charities that haven’t yet invested in modern payment equipment, and they would be well advised to make the move now.
But they can also take heart that, while guarantee cards are on the way out, cheques themselves are here to stay.
Plans by banks to abolish the cheque clearing system in 2018 have so far met with fierce resistance from Government ministers, adamant that a suitable alternative was not yet ready.
Moneyhighstreet comments: “With most of us relying on debit and credit cards these days to make everyday payments, the abolition of cheque guarantee cards will have little impact.
“If you still use cheques regularly, and need to guarantee them, it’s time to consider switching to online banking, along with credit and debit cards for everyday purchases.
“Savvy shoppers can also find a range of deals on credit cards that can help them manage their finances without having to guarantee cheques.”