Cheque guarantee system ends today

Today, Thursday 30 June, is the last day shoppers can use cheque guarantee cards, which ensure payments are honoured by a bank even if the buyer doesn't have sufficient funds. The scheme has run since 1965.

Banks are scrapping the scheme because they say it's too costly; last year they lost £43m due to fraud. It means millions of people will be unable to offer protected payments by cheque in shops, train stations, to delivery and tradesmen across the country. This is likely to lead to a mass refusal to accept cheques.

The banking industry body - the Payment Council - has also announced that cheques will be scrapped in 2018. The public outcry against this was so great that they were forced to say that cheques would not be scrapped until there was a suitable alternative. To date, they don't seem to have any idea about what that alternative might be - although it is rumoured that it is likely to be a 'paper-initiated' transaction system.

It is the small trader who is likely to lose most with the demise of the cheque: transaction charges if people switch to debit cards or a greater likelihood of being robbed if people switch to cash. If cash becomes the preferred method, it is also likely that the government will lose revenue through an increase in tax evasion.