The decline of the cheque is modern phenomenon. God forbid your grandmother slips a non-negotiable cheque for $10 into your birthday card with the message ‘work hard for your money’. This behaviour is most likely incomprehensible to anybody born after 1990. And it’s even rarer that a paying customer will pull out a chequebook at a jewellery store to purchase a wedding ring.
Australian Payments Clearing Association (APCA) Chief Executive Chris Hamilton recently told the ABC’s AM program:
"Older people are much more likely to use cheques than younger people. What the most recent figures show us is that cheques are falling out of general ordinary, everyday use quite quickly.”
Cheques aren’t obsolete. However, even rusted-on cheque users such as debt collectors are changing their tune. According to APCA research,
cheque use declined by 71 per cent between December 2002 and December 2014. In 2014 alone, cheque use fell by 14 per cent.
Meanwhile for electronic payments, card use was up by 8.8 per cent and direct debits by 7.5 per cent.
As the numbers continue to rise and fewer merchants begin to accept cheques (or slap a handling fee on them), the future looks bleak.
Remembering the cheque
It is hard to pinpoint when cheques made their first appearance. Some believe it was in the Persian Empire where letters of credit referred to as Chak were exchanged. Muslim traders used a similar system in the 9th century.
Fast forward to Holland circa 1500, for the first signs of personal cheques. In Britain, cheques have been in use for over 350 years. The first handwritten cheque signed in Britain was made out for £400 to a Mr Delboe and drawn on Messrs Morris and Clayton, scriveners of the City of London. In 1694 an account was created by the Court of the Bank of England that allowed customers to draw notes on the Bank up to the extent of their deposits.
In 1717, the first printing of fraud prevention cheque paper was ordered and by 1818, the Commercial Bank of Scotland issued the first personalised cheques. In 1830, the Bank of England started creating actual books of cheques, which were bound and stitched together. In 1833, the first cheque-clearing house opened in Lombard Street, London. Across the water in the United States, a Boston businessman used them when he mortgaged land to a fund and wrote cheques against it. That was 1861.
The modern day
The most significant entry into the history of cheques came during the 1960s, when due to the proliferation of this form of paper payment, cheque processing and clearing became automated. Right here in Australia, Australia‘s first banking mainframe, FABACUS, began operation in 1964 with much of the floor space occupied by two large cheque sorters.
Cheques hit their peak in the 1990s, but in 2005, when Shell became the first large retailer to refuse cheques, the writing was on the wall.
There are still innovations surrounding the use of cheques. In May 2015, APCA mandated that clearing could be done from cheque images. The CBA already takes images when you deposit a cheque through a teller machine. In the UK Barclays Bank
is taking this one step further by implementing mobile imaging.
In fact, Barclays has invited its customers to take part in the roll out of its cheque imaging service that allows cheques to be paid in at any time, in any place, simply with a few clicks on a smartphone. The technology also allows customers to take a photo of the cheque they want to deposit on their smartphone before filling in a simple electronic deposit form and hitting send.
The future is an electronic one and certainly cheques are aiming to keep up with the transition into the digitisation of banking.
This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY.
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