Faster Payments is Frontrunner to Replace Cheques, According to Survey
July 2010 marks the first anniversary of direct corporate access (DCA) to the UK’s Faster Payments Service (FPS). In light of the announcement made in December 2009 around the close of the central cheque clearing in 2018, more corporates are considering whether this relatively new channel can be used to replace the more traditional payment method.
Norman Taylor, product manager at Experian Payments, looks at what alternatives exist for businesses looking to phase out cheques in the near future: “Large UK corporates are already beginning to plan for the closing of cheque clearing in 2018, which presents a clear opportunity for banks to take advantage by providing alternative solutions. In fact, recent research from Experian Payments revealed a strong correlation between high cheque usage and an interest in FPS. According to our survey, 50% of utility companies and 40% of insurers still use cheques to make around half of their payments, and it is precisely these industries that have already begun to formulate cheque migration plans with 83% of utilities and 50% of insurers planning to make use of FPS.
“In addition, the survey revealed that the vast majority of organisations (80%) expect the removal of cheques to benefit their business. For 46% of organisations, it specifically provides an opportunity to create greater efficiencies in payments. While there is no ‘silver bullet’ to replace all uses of cheques, FPS and other similar services are a frontrunner for corporates looking to create greater efficiencies by automating payments.
He added: “Eight years might seem like a long time away, but UK corporates need to start thinking about their migration plans now in order to be fully prepared. Replacing the cheque will not just require choosing an alternative payment solution, it also raises issues such as substituting paper forms of payment advice that corporates may not immediately be aware of, but could require the adaption of internal processes and marketing techniques.”