Brits continue to turn away from cash and cheques

For a number of years now, we have seen a reduction in the use of cheque and as such, the Payments Council decided on the closure for cheque clearing by 2018. In our experience, large UK corporates are already beginning to plan for alternative solutions. In particular, we have seen that those UK corporates that traditionally have a high cheque usage, such as utilities companies or insurers, are the ones that are already formulating their cheque migration plans ahead of the 2018 deadline, and are subsequently showing an interest in the Faster Payments Service (FPS). While there is no ‘silver bullet’ to replace all uses of cheques, FPS, and other similar services, is a frontrunner for corporates looking to create greater efficiencies by automating payments.

In addition, the limit for Faster Payments transaction values increased from £10,000 to £100,000 per transaction recently and this could have significant benefits for corporates looking to improve their payments efficiency. For instance, businesses providing loan facilities will now be able to use Direct Corporate Access (DCA) for Faster Payments for funding borrowers’ accounts with amounts of up to £100,000. Faster Payments is particularly attractive for corporates from a customer service point-of-view as it enables an almost real-time transfer of money into a customer’s or supplier’s account.

While many businesses may still assume Bacs or CHAPS is the answer for a replacement of the cheque as a payment channel, Faster Payments should also be considered as an option. While increasing the transaction value limit of Faster Payments is unlikely to have an enormous impact on volumes in the short term, it will certainly help to further broaden the scope of the channel for corporates which in turn should position it as a favourite in the race to replace cheques while the encouragement by banks for corporates to stop making payments by cheque will be an additional catalyst.