Payment Council's cheque plans 'could be detrimental to small businesses'

Date: 18th December 2009

A number of small businesses and their customers could end up paying the price as cheques become consigned to history.

Earlier this week, the Payments Council announced that it is to close the national cheque clearing system within the next few years, thereby bringing an end to the 350-year-old method of payment.

Although supporters of the proposals point out that this will save benefit both banks and businesses of all sizes, particularly given that cheques are considerably more expensive to process than electronic methods of payment, critics have pointed out that some smaller firms and some consumers will lose out.

According to the Federation of Small Businesses (FSB), not only are many smaller traders used to dealing with cheques to keep on top of their tax returns, but many also have a customer base that are largely reliant upon this system of payment.

"The Payments Council's action will be extremely detrimental to those businesses and their customers that rely on the humble cheque and have now been presented with no viable alternative to it," FSB chairman John Wright told the Financial Times.

Earlier this month, the FSB welcomed the news that the chancellor intends to scrap a planned 1p rise in the rate of small companies' corporation tax.