The cheques market

Since the number of cheques written peaked at 4 billion in 1990, the cheques market has been in decline and, in 2009, 1.3 billion cheques were used for payments and to acquire cash. However, in value terms, the cheque is still an important payment method: in 2009 cheques were the second largest retail payment system in value terms (£1,255 billion in 2009) after Bacs automated payments (£3,860 billion).

The rate of decline in personal cheque transactions has accelerated in recent years and between 2004 and 2009 volumes fell by 44% to 683 million. The decisions by many merchants to stop accepting personal cheques, particularly in the retail sector, have been a major factor driving this change. Consumers are also using cheques less for regular bill payment, preferring instead to pay by Direct Debit and internet and telephone banking. In 2009 cheques accounted for 5% of personal non-cash payments, down from 12% in 2004.

Total business cheque transaction volumes peaked in 1997 and, mainly due to migration to automated methods, have fallen by 32% over the last five years to 598 million transactions in 2009. Almost all businesses still use cheques to a greater or lesser extent and, for around half of businesses, cheques comprise the same or a higher proportion of the payments they make now as they did three years ago.