Cheque Guarantee Card Scheme Closes

The Payments Council, the organisation that sets the strategy for UK payments, set the date for closing the scheme in 2009, following a decline in the use of guaranteed cheques.

Under the scheme, a bank will currently pay a guaranteed cheque (one given to the recipient with a debit or credit card showing a cheque guarantee hologram for £50, £100 or £250 and where the recipient also copies the card number onto the back of the cheque), even if there is not enough cash in the account on which the cheque is drawn.

The last time a cheque can be accepted under this scheme will be when it is written on and dated 30 June 2011.

The Payments Council says that around one-third of guaranteed cheques are used in shops, one-sixth for bill payments and the remainder for a wide variety of purposes such as paying tradesmen, for leisure activities, for professional services, delivered items (e.g. milk), holidays and hotels.

But despite the axing of the guaranteed cheque scheme, the Payments Council says very little will change, adding: “As now, any business can decide it is prepared to accept a cheque without a guarantee: as with all types of payment, shops and businesses decide which payments they want to accept.”

It says: “You can be certain that cheque funds are yours (and won’t be returned unpaid unless you are a knowing party to a fraud) at the end of the sixth working day after you’ve paid in a cheque: so this is the point when it’s safe to release goods or services.”

Banks and building societies that provide cheque guarantee services have been working to advise businesses and individuals who use the system of the closure date and to provide details of alternative forms of payment. For businesses, these include debit, credit or charge cards, online banking, telephone banking and cash.