Landlords and letting agencies who accept cheque payments for rent will be keeping a close eye on the Payment Council’s new National Payments Plan, in which it agrees not to phase out cheque payments until adequate alternatives are in place.
The move has been welcomed by the Forum of Private Business whose survey at the end of last year revealed that most smaller businesses want market forces to determine when they should switch payment methods.
About half of all respondents (48 percent) believed that removing cheque payments within the next seven years would harm their businesses.
The information helped bring about a change of heart from the Payments Council, which had suggested that banks stop clearing cheques altogether by 2018, following a decline in their use as a method of payment.
“The FPB’s research and anecdotal evidence shows that, even in a world filled with electronic telecommunications, many small businesses, including start-ups, still rely on cheque payments,” said the FPB’s senior member services representative, Philip Moody.
A huge 95 percent of the firms surveyed said that they regularly pay other businesses, including suppliers, utility companies and insurers, by cheque. About 55 percent said that cheques are their most frequent means of payment. Just fewer than 95 percent said they continue to accept cheques from their business customers.
However, many businesses ranked cheques a close second to cash as their least preferred method of being paid, and welcomed alternatives in the longer term. More than 60 percent said that, when receiving payments, they prefer Bankers' Automated Clearing Services (BACS), which are direct payments from one bank account into another.
Brian Pomeroy, Chairman of the Payments Council, believes future plans will satisfy both the payments sector and its users by emphasising innovation, efficiency and integrity.
He said: “We also need to undertake further research and consultation around a number of areas, and then take final decisions in the light of that work. However, we are fully aware that alternative arrangements to cheques have to be available before the closure of the cheque clearing service can be seriously contemplated.”
The FPB’s lobbying played a part in the introduction of the Late Payment of Commercial Debts (Interests) Act in 1998, which allows companies to charge interest on late payments.
