Cheque mate: State will only accept electronic payments
THE use of cheques is expected to collapse from today when the State and public bodies stop sending them and will no longer accept them from businesses.
The move coincides with changes made by Ulster Bank to the rules for current accounts, which are expected to see an extra 50,000 people being hit with monthly charges for the first time.
Up to now, the bank's current account customers were able to get around paying a monthly maintenance fee of €4 by putting €3,000 into their account each month.
But from today, the only way to escape the Ulster Bank fee will be to keep €3,000 in the account at all times. Ulster Bank calls this a fee waiver. The bank has around 600,000 current account customers, and the change will take to around 350,000 the number of customers to be hit with fees - an extra 50,000 people.
The change comes just a year after the bank introduced fees, following the lead of Bank of Ireland and AIB which also require customers to keep credit balances in their current accounts to avoid charges and fees.
KBC Bank requires customers to keep a daily credit balance of €2,000 to avoid ATM and cheque processing fees.
Calculations on Central Bank figures by Simon Moynihan of price comparison site Bonkers.ie show that since the beginning of the year €2.25bn has come out of savings accounts, and €2.27bn has gone into overnight accounts, which include current accounts to avoid fees.
He said this meant that people are moving huge amounts of money from deposit accounts into current accounts to escape paying current account fees.
Meanwhile, the cheques are set to start to become relics of the past from today, which is being called E-day.
From now on, public sector bodies will stop sending cheques and stop accepting cheques from businesses. This form of payment will still be legal tender, but cheque use will be officially discouraged.
The National Payments Plan (NPP) - a body made up of representatives of the Government, the Central Bank, business groups and banks - wants consumers and firms to switch to electronic payments instead.
The use of cheques costs the economy €1bn a year, mainly made up of processing charges and the cost of security.
Ronnie O'Toole of the NPP said cheque usage here was high by international standards but was declining rapidly. It is expected that 61 million cheques will be issued this year, down eight million from last year.
"Business cheque usage is reducing faster than consumer usage, and this trend is expected to accelerate in the wake of E-day," Dr O'Toole said.
Small firms tend to be big users of cheques, with around 62,000 send and received by SMEs a day.
The State levies 50c in stamp duty on every cheque, with bank charges often imposed by banks for processing them.
With the cost of a stamp now 68c it is costly to pay bills by cheque, experts said.