Halifax claims that the end could be in sight for cheques. New industry figures show that cheque usage has hit an all-time low as people switch to other more convenient forms of payment such as debit cards. Based on the current rate of decline, cheques could almost be 'extinct' within the next 20 years.
The number of cheques issued in 2004 was 2.1 billion – a reduction of 7% from the previous year and well below the peak of 3.7 billion in 1990. Business cheque use has also fallen every year since 1997, with companies switching to direct credits for salary and trade payments.
Debit card payments and payments made electronically and via phone or internet have taken over from cheques. The increase in such payments has been seen over the last few years, with over 90% of salaried adults now being paid by direct credit to their bank account and 40% of state benefits paid in this way.
The latest industry figures show that there were over 3.7 billion debit card transactions in 2004 (compared to just 522 million debit card transactions in 1990) as shoppers abandon cheques as a way of payment. The introduction of Chip and PIN technology will have certainly contributed to the growth in debit card transactions and they are now worth over £269 billion each year. Meanwhile, the total number of banknotes issued by the Bank of England fell by 25% between February 2001 and February 2005, from 982 million to 735 million. Although the number of £5 notes issued each year more than halved to 107 million over the same period, the number of £10 and £50 notes remained virtually unchanged.
