Wave Goodbye To Cheques!

Cheques are becoming increasingly unpopular. But what will replace them? Emma Lunn thinks she knows...

Recently, while singing along to Noah and the Whale's catchy hit `Five Years Time', I got to thinking about what forms of payment will still be around in 2013. Will cheques be obsolete? Will credit cards be ancient history? Will we be able to pay for everything simply by waving our mobile phones over a sensor?

Ridiculous although it might seem now these are the ideas and predictions currently being floated around and even trialled in some cases.

Earlier this year, M&S announced that it would no longer accept cheques. From March it has only accepted cash or cards as payment for good in its stores. Other retailers to have banned cheque payments include Argos, Asda, Boots, WHSmith and Next.

This will make my fellow Fool Laura Starkey happy. She hates cheques.

And she's not the only one. Personal cheque use has halved in the last 10 years and now cheques account for only 4% of retail spending, with debit/credit cards accounting for the lion's share at 60%. However most banks still issue cheque books with new accounts, and cheques still come in handy from time to time. The elderly often prefer them and they can be useful for paying tradespeople.

A quick flick through my own cheque book stubs reveal I've only written about half a dozen cheques so far this year - for the service charge on my flat, to my accountant and to pay the plumber. All my bills are paid by direct debit - something utility companies encourage by offering discounts to people paying this way.

The Future

So what does the future hold for the humble cheque? I'd be surprised if it died out completely in the next five years but I think customers may soon have to ask their bank for a cheque book rather than being automatically given one.

Perhaps the cheque will remain on as a symbol, paraded around in oversized form on TV telethons as businesses proudly show off their charitable contributions, or handed to winning contestants on game shows?

The Next Big Thing

Contactless payment cards already look set to be the next big thing. Instead of being swiped, these cards are waved or tapped to make a payment.

Earlier this year Barclaycard launched the OnePulse three-in-one card which includes an Oyster card (for travel on London transport), a cashback credit card and a contactless payment card. The contactless element can be used for purchases under £10 in certain stores and users simply have to waive their card over a sensor.

Similarly Mastercard's PayPass lets you pay for goods under £10 by simply tapping the card on the PayPass symbol at a checkout. When you see a green light and hear a beep, you're done.

Some experts are predicting the death of the traditional credit card over the next five years. They say that that paying by plastic will make way for payments by mobile phone, key fob or even fingerprint.

It may seem far-fetched but it's already happening elsewhere. In Japan they already have `wallet phones' which can be used to pay for some purchases.

It's been tried out in this country too. Telefónica O2 UK conducted a near-field communications (NFC) trial earlier this year. 500 people used a Nokia 6131 NFC phone to make retail purchases or pay for travel.

Those taking part in the trial could pay for travel on buses, trains, trams or the tube by swiping the NFC-enabled phones on standard Oyster travelcard readers. O2 have said it hopes to roll out this kind of payment form in time for the 2012 Olympic Games in London.

Whether this turns out to be the case or not remains to be seen but, in my opinion, contactless payments could well be the way forward.

What do you think?

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