Predicting the date of the UK’s last cheque
I know what a cheque is, I’ve seen the cheque book and pen on Blankety Blank.
Gen Alpha
With cheque payments now representing less than 1% of the total Bacs, CHAPS, Faster Payments and Image Clearing System volumes when do you think the last cheque will be processed in the UK?
After offering a quick recap of the rise and fall of cheques we’ll use 34 years of data to predict the actual date when the humble cheque will bow out as a payments instrument……
A 17th Century Alternative To Cash
Bills of Exchange began to be used as an alternative to cash for domestic payments during the 17th Century. The earliest surviving cheque printed with the name of the issuing bank is dated 1759 and was drawn on Messrs Vere, Glyn & Halifax.
Innovation followed, albeit at a somewhat pedestrian pace, after 52 years The Commercial Bank of Scotland is believed to have been the first bank to issue personalised cheques and 19 years later customer demand led to the Bank of England issuing bound or stitched books of 50, 100 or 200 cheques.
From these humble beginnings, cheque usage grew over three centuries as the cheque took centre stage as the pre-eminent non cash payment instrument.
Cheque volume growth in the 1970’s was between 4% and 10% per annum although during the 1980’s growth had reduced to between 2% and 6% per annum.
Peak Cheque
Peak volume was reached in 1990 following 30 years of rapid innovation which included the introduction of MICR reader / sorters (1962), the introduction of cheque cashing cards (1965), the launch of cheque guarantee cards (1966), abolishing cheque stamp duty (1971) and an increase in the cheque guarantee limit to £50 (1977) which was followed by a further guarantee limit increase to £100 and then £250 (1989).
In 1990, 4 billion cheque payments were made. Of these, 2.5 billion were cleared through the inter-bank clearing managed by the Cheque and Credit Clearing Company, the remaining 1.5 billion being in-house cheques which were either paid into the branch on which they were drawn or processed intra-bank without going through the clearings.
A steady but profound decline
In the 32 years since the 1990 peak cheque volume, there has been a steady but profound decline in cheque use.
In the 12 months to April 2024 only 106 million cheques were processed representing a 15% reduction in volume in just 12 months.
The history lesson nearly over - you are about to discover our predicted date for the UK’s last cheque…… keep reading!
Our payment habits have changed
For over 300 years the only real payment rival to a cheque was cash, but in the 30 years leading up to peak cheque use we saw the introduction of the first generation of electronic payments including: Bank Giro Credits, Standing Orders, Direct Debits, Direct Credits, Credit Cards, Debit Cards and CHAPS.
These alternative payment choices were readily adopted by businesses and consumers and the scene was set for the transition to a predominantly digital payment society.
Since the early 2000s the payment habits of large retailers and petrol stations changed when they stopped accepting cheques for payments, a practice that has generally now expanded to include the vast majority of retailers.
In the 32 years since peak cheque the introduction of initiatives including online banking, mobile banking, Faster Payments, contactless payments, Apple Pay and, recently, Open Banking have led to the formation of deeper digital payment habits.
The displacement of cheques by alternative payments options is profound and despite the rejuvenation of cheque processing and the customer offering in recent years (via the expensive cheque imaging project), the rapid decline of cheque use has not been stemmed let alone reversed.
If you enjoy reading Payments:Unpacked pledge your support for just £2 a month.
The content of our pockets has changed
In 1975 American Express launched a campaign entitled “Don’t Leave Home Without It” encouraging the aspirational business person or tourist to carry travellers cheques.
The famous tag-line became synonymous with American Express traveller’s cheques from the mid-seventies through to the late 1990s – making it one of the most successful campaigns of all time.
Baby Boomers and Generation X will have distant memories of not leaving home without some cash, a cheque book and a cheque guarantee card. The cheque book and accompanying guarantee card were initially displaced by a debit / credit card and now the physical manifestation of a plastic card has been displaced by a virtual card on a smartphone or wearable device.
For Millennials and Generation Z the cheque is regarded as an uninteresting historical artefact that their parents and grandparents used to buy a tent in Millets or the prize gift on TV’s Blankety Blank.
Stereotypically, a Millennial will bank with a challenger bank who doesn’t even offer a cheque book.
Predicting the date of the UK’s last cheque
ChatGPT predicts that:
….it’s reasonable to predict that the UK’s last cheque might be written between 2030 and 2035. This estimation balances the rapid adoption of digital payments with the necessary time required to ensure inclusive financial practices for all demographics.
ChatGPT
Based on ChatGPT’s analysis we asked a data analyst to evaluate the UK’s cheque data over the last 34 years and, based on last four years of cheques processed, conduct trend analysis to predict that date that the last cheque will be processed in the UK
The graph below demonstrates the rapid decline in the use of a cheque as a payments mechanism over the last 34 years:
And, based on trend analysis, the predicted date for the UK’s last cheque is…
22 January 2029
Trend analysis based on the period April 2020 to April 2024 predicts that the last cheque in the UK will be processed on the 22 January 2029.
There are, of course, many factors that might accelerate or slow down the cheques demise but it is clear that the end of the cheque is nigh.
For those that choose to or have to rely on the cheque as a method of payment we must seek out credible alternatives to substitute the humble cheque before it is too late.
Do you agree?
Take part in our poll: “When do you think the UK’s last cheque will be processed?”
Enhance your payments knowledge
If you enjoy reading Payments:Unpacked pledge your support for just £2 a month.