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Potential reprieve for cheque guarantee cards

Potential reprieve for cheque guarantee cards

Category: Money

Updated: 16/11/2011
First Published: 16/11/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

A potential u-turn on the abolition of cheque guarantee cards could be in the works.

The payment method was scrapped in June this year, but could be reintroduced as there are fears that its disappearance could mean that retailers are less willing to accept cheques.

The system meant that people could guarantee their cheques to the value of £50 or £100 by wiring their card numbers on the back of a cheque.

Some sixty million cheques were written with card numbers on the back last year.

The cards that allowed a guarantee to be made carried a Shakespeare hologram on the back.

An about-turn has already been made on the decision to phase out cheques by 2018, which was originally met with fierce criticism by businesses and organisations for older people.

The Payments Council is currently looking into the effects of scrapping of cheque guarantee cards.

It said it could not say one way or the other if the scheme could be revived, but is to publish its research and liaise with the Treasury Select Committee before the end of the year.

The Treasury Select Committee said there is a case for bringing back cheque guarantee cards or a similar scheme to ensure people or businesses have confidence when accepting a cheque as payment.

In a statement, the committee said: "Without such a scheme there is a risk that more and more shops and other bodies will refuse to accept cheques; the cheque would wither on the vine.

"An increasing number of shops and other organisations are refusing to accept cheques as a result of the abolition of the guarantee card."

It also indicated it would be prepared to force the Payment Council's hand on the matter if it felt necessary, as was the case when it became clear there was little appetite for cheques to be abolished.

"Bringing the Payments Council within the scope of financial regulation is needed to ensure there is never again a repetition of the cheques debacle," added the committee.

"The Payments Council was able to take decisions affecting millions of people at its own initiative without any effective scrutiny by a regulatory body."

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