Tesco to scrap cheque payments
Tesco is to stop accepting personal cheques from shoppers despite concerns that this may disadvantage older customers.
The supermarket giant says that from 25 February it will only accept payments by cash, debit card or credit card. It says scrapping cheque payments will speed up the service at checkouts and also prevent cheque fraud.
However, Tesco stores will continue to accept business cheques authorised by Transax at customer service desks and petrol filling stations only.
From 1 March, Marks & Spencer will also stop allowing customers to pay by personal cheque.
Mervyn Kohler, spokesman for charity Help the Aged, says: "Tesco is narrowing down the options for older people in a frightening way.
"Many older people are still concerned about the security of card payments and prefer familiar payment methods like cash and cheques.
"Cheques still remain a very important channel that older people rely on, and it is rather premature to be withdrawing it while people still want to pay in this way.
"The right way forward is to provide people with several different options."
Figures from APACS, the UK payment association, show that five million adults use cheques on a regular basis with women 52% more likely to pay by cheque than men.
But it estimates that by 2015 personal cheques will only account for 2.3% of all non-cash payments.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.