History of the cheque

The cheque evolved over many years,with the earliest handwritten cheque known to be in existence dated 16 February 1659. Fully-printed cheques were introduced in the early 1700s,with the first personalised printed cheques produced in 1810. The daily cheque clearings began around 1770 when bank clerks met at the Five Bells (a tavern in Lombard Street in the City of London) to exchange all their cheques in one place and settle the balances in cash. The renting of a room for this purpose first occurred in 1773.

Following the formation of a permanent committee of bankers in 1821 to regulate the clearings (later known as the Committee of London Clearing Bankers), the first clearing house building, initially owned by a group of private bankers,was built in Lombard Street in 1833. Although there were various changes in membership,and settlement in cash was replaced by settlement across accounts held at the Bank of England, this arrangement continued for 150 years until the Cheque and Credit Clearing Company was established in 1985. The Lombard Street clearing house closed in 1994 and the English exchange centre moved to Alie Street in east London. The Scottish clearing became part of the Cheque and Credit Clearing Company in 1996 bringing with it a Scottish exchange centre. At the end of 2003, the English exchange centre moved outside London. Sterling cheque settlement still takes place at the Bank of England.

Cheque use increased greatly over the years and peaked in 1990,when 4 billion personal cheques were processed. Since 1990,cheque volumes have gradually declined due to the growth of alternative ways to pay. Personal cheque use has halved in the last ten years, with just 1 billion being written in 2006.

Businesses and consumers have increasingly chosen to pay bills by direct debit and to use plastic cards to pay for goods and services, whilst many large retailers have taken the decision to stop accepting cheques. This trend is set to continue,with personal cheque volumes predicted to drop a further 60% to 392 million by 2016. Despite this trend, the industry is committed to maintaining the quality and integrity of cheque clearing and to ensure a high level of customer service and transparency.