Scott Gray debates whether the Payments Council’s decision not to abolish cheques in 2018 is a welcome reprieve or just delaying the inevitable
The fundraising industry breathed a collective sigh of relief after the Payments Council’s recent U-turn on plans to abolish cheques. Yet there is nothing to stop banks refusing to accept donations by cheque tomorrow, and the cheque guarantee system has already closed. So is this about turn really a cause for celebration or a hollow victory?
When the Payments Council announced it would be phasing out cheques, there was uproar amongst charities. Quite frankly, I’m not surprised. The Council’s communication was poor and lacked empathy for corporate and charitable organisations alike who were deeply concerned by what this would mean for them. However, I would argue that their initial approach to proactively manage the withdrawal of cheques was right.
As a sector, we missed the point about why the Payments Council was doing this – in short, the reaction was panic.
The truth is that the Council stepped in not to accelerate the end of cheques, but to take control of a dying payment mechanism. By announcing an end date for cheques, it spurred on the thinking and development needed for new and workable payment vehicles while giving businesses, charities and the public a clear timeline for what would happen and when. It was a message to banks too that, while cheques had become expensive to process, they should hold on to the mechanism for a few more years.
The use of cheques has fallen dramatically since 1990, by as much as ten per cent each year. By December 2010, we were writing 290,000 fewer cheques per day than in the previous year. The decline has been driven by retailers, consumer spending trends, smart checkouts, processing speeds and major outlets no longer accepting cheques. Most people still have cheque books, but they don’t particularly like using them when a plastic card is so much more convenient.
A lot of us only write cheques when it is requested by the recipient; a local tradesman, a club or a society, for example. Except amongst the older generations, it is very rarely the preferred payment mechanism of the consumer. Bills are paid by direct debit or standing order, one-off payments by card over the phone or online. People today want fast, secure and easy ways to pay.
When you look at your donor base, and in particular at those that give by cheque, are you certain that you are giving them a wide enough range of payment options? Have you talked to them and researched how else they might give? The transition to another payment vehicle can be a positive opportunity to re-engage with donors, to talk about what the charity is doing and to thank them for their support.
For other supporters, particularly the elderly, cheques do work. They feel comfortable putting pen to paper and writing out payment instructions. For those people, change will not be easy. It is crucial that alternative payment schemes are developed that will work for them.
Whether or not there is a firm end date in sight, or your bank stops accepting certain cheques, or they get too expensive for your charity as bank charges increase, the point is that change is upon us. Cheques may be here for a few years longer but their days are clearly numbered.
Without the Payments Council’s timeframe, I worry that we have lost the momentum to develop a viable payment scheme that will work for charities. How is the sector planning for this? Where is the panel of fundraisers working to inform this process and to shape the development of their future donation mechanisms? Where is the platform for debate?
Rather than lamenting the loss of a mechanism that is quickly becoming unsustainable, surely our time and energy would be better put to researching and debating alternative payment vehicles that will work for supporters – paper-based and otherwise.
It’s sometimes hard to imagine how things can change. How could a volunteer fundraiser accept payment from someone whose purse was empty? How can we make elderly people feel as comfortable using an electronic, online or voucher payment scheme as they do writing out a cheque?
Just think back ten years, remember when smartcard payments weren’t yet available, online giving was minimal and SMS text giving was but a dream. Now consider that more than eight million Londoners use an Oyster card regularly, online fundraising is generating tens of millions, and text giving raises a further £15m each year.
The bottom line is that we need to embrace the full range of payment techniques currently available and feed into the development of new vehicles. Charities must be proactive, asking donors what they think and want, and testing alternatives while migrating away from cheques.
Charities face an even greater challenge now, to ensure that they can access guidance for reducing their reliance upon cheques and engaging donors with alternative payment systems, while battling an unseen timeframe.
Scott Gray is managing director at Rapidata Services Plc
This article first appeared in The Fundraiser, Issue 9, September 2011