to be annoyed by banks saying I don't need a cheque booik any more?

[camicaze]

What IS all this about cheques being abolished and surely its unreasonable? Is it just me that still gets through quite a few cheques? School dinners, nursery fees, Brownie subs, clubs, party deposits - the list is endless.
I am particularly annoyed at how slow my bank are to replace a used cheque book as if I need to be eduacated that debit cards exist...

Aah. That explains everything. Are you a parent?

Two teenage daughters.

I am looking at an envelope that my daughter brought home from school as they are raising money for Lepra. If she takes the money to school in the envelope the ONLY payment options are: cash, cheque or postal order.

The only way to do it electronically is on Lepra's website, but then DD doesn't get a Lepra T-shirt from school if I do that.

I know you seem to be on a one woman crusade to get people to stop using cheques, but it looks like you have an uphill struggle.

I have a couple more questions:
How secure is online banking? I am very wary, so don't use it

How secure is using credit/debit cards on the internet? Amazon automatically store card details which really annoys me, so every time I have completed a transaction I go into My Account and delete the card details. Other organisations usually give you the option whether to store these details.

"I am looking at an envelope that my daughter brought home from school as they are raising money for Lepra. If she takes the money to school in the envelope the ONLY payment options are: cash, cheque or postal order. "

Yes, and in 1996 you could buy music on Vinyl, CD or Compact Cassette. That didn't make the LP and cassette any less doomed. When I bought some tickets for a Queen concert in 1980, I sent that nice Mr Goldsmith a postal order: the postal order is now for practical purposes as dead as Freddie.

No one is suggesting killing cheques tomorrow morning, because right now there are things they're still useful for. However, citing cases where they're still used because that's the way it's always been proves nothing: they're going away. And that's because they're too easy to forge, too easy to alter and too expensive to process. They've got ten years.

"How secure is online banking? I am very wary, so don't use it "

That's because people tend to over-estimate the risks of things they're unfamiliar with, and under-estimate the risks of things they think they understand. It's a great deal more secure that (speaking from painful experience) having a bag stolen from a gym containing both your cheque book and your cheque card. What are the risks you perceive in online banking? Speaking professionally, I have few concerns. I wish they used tokens for login (some do, my bank doesn't) but beyond that I think it's well managed.

"How secure is using credit/debit cards on the internet? Amazon automatically store card details which really annoys me, so every time I have completed a transaction I go into My Account and delete the card details."

What threat are you worried about? Because by any rational assessment you're doing precisely the wrong thing. Instead of using the facility to make repeat purchases without re-inputting the CV2 (the three-digit code on the signature strip), which Amazon cannot legally store, you're typing the complete stack of credit card details in every time, including the CV2. Because Amazon can't store the CV2, there's provision in merchant agreements for repeat transactions - same card, same address - to proceed without the CV2. Change anything, they need the CV2 to be re-typed.

So in order to guard against the risk of someone being able to make an order with Amazon for something you didn't ask for and have it shipped to you, instead you're passing the crown jewels of your CV2 through your home computer every time you buy something. The few times you type that, the better.

The risk with Amazon's storing of the credentials is that someone who breaks into your Amazon account can order something and have it shipped to your address. It's a risk: there have been scams where people do that, and then wait by the house and sign for it when the van comes. But it's a crude and risky crime, unlikely to succeed for long, which requires the criminal to be on-site.

On the other hand, every time you type your CV2 code, you're exposing it to a key logger or other malware. Unless I'm missing something, that's both a bigger risk and one much more likely to end in acrimony with the bank.

All the things that worry me about typing credit card details are at my end. The less I have to do it, the better. Honest companies can't do anything with your stored details. Dishonest companies wouldn't delete the stuff when you type "delete". And without the CV2, what can they do anyway?

I wonder if they are also going to get rid of bankers' drafts. I doubt it. It is only Joe and Jill Public who will be denied the facility to use cheques, in order to save the banks money in processing them.

When all details are held online, there is a greater danger that hackers can access teh information. If there was no problem due to the simple remedy of CV2 codes being deleted why have there been fraudulent transactions following hacking of account data.

www.timesonline.co.uk/tol/money/consumer_affairs/article1588849.ece
news.bbc.co.uk/1/hi/7446871.stm

That's great, thanks. I will let Amazon keep my details next time. Regarding the Lepra donation, I am not the type that does something because it's the way it has always been done. I just wanted to point out that often the payee doesn't currently have any options other than cash or cheques. I have never sent a postal order and don't suppose anyone uses them these days.

I don't use online banking because I don't actually need it at the moment. All my regular bills are paid by direct debit, so the only time I need the bank is to pay money in ( a cheque received from someone else for example). If I want some money I go to a cashpoint or get cashback at the supermarket.

Your comparison about vinyl records/cassettes/CDs isn't quite the same because it was immediately obvious why CDs were much better

I have another question:
When I renew a magazine subscrition by post (they haven't, up until now, given me the option to do it online) I am given the option of sending a cheque or putting my debit/credit card details on the slip which I then post. Which is the more secure?

"I wonder if they are also going to get rid of bankers' drafts. I doubt it. "

Current advice is to not accept one: frauds involving bankers' drafts for car purchases are fairly common.

The TK Max affair was one of the things that led to PCI compliance being demanded for everyone who processes card details on-line. The break-in was (probably) by the use of a good aerial to attack ludicrously insecure (WEP) wireless security. PCI isn't the greatest standard the security world has ever seen, but it's not bad, and breaking into a network that has passed a PCI audit would be a substantial undertaking. Comparing the online card processing world circa 2005 with today is unhelpful: prior to PCI auditing it was the wild west.

And TK Max was one of the reasons for the introduction of CV2s. Note that the TK Max story mentions that cards were misused (although the gossip in the industry was that the level of mis-use was very low) but the Cotton Traders case doesn't. Name, address, credit card number and expiration date doesn't get you much as an attacker.

Top tip: there's an argument that erasing the CV2 from your credit card makes handing it to people in restaurants safer. Write it down elsewhere.

". All my regular bills are paid by direct debit, "

Ten years ago, this conversation would have been "why is my electricity company forcing me to use direct debits when standing orders are much better?"

"When I renew a magazine subscrition by post (they haven't, up until now, given me the option to do it online) I am given the option of sending a cheque or putting my debit/credit card details on the slip which I then post. Which is the more secure?"

Interesting: I have two UK magazines on Direct Debit and a US one that permits online renewal, so I haven't written a cheque for a magazine since Noah was a lad. I think I'd do it with a card, because a contested payment is easier to deal with than a mis-used cheque, but I haven't given it a lot of thought. I'd rather use a card over the phone than by post, though.

Ten years ago I paid my bills quarterly as I preferred to hang on to my money where it could gain some interest. None of the utility companies could offer me a good enough incentive to pay by direct debit.

What is the difference between standing order and direct debit? To me they seem to be pretty much the same thing.

Also, how can someone misuse a cheque sent through the post? If someone had opened the envelope and got my card details, surely there is more scope for misusing those then a cheque?

Last question. How are you going to persuade schools, clubs, associations etc to change from using cheques? It has been pretty clear from the number of posts on this thread that many of them don't currently have the facilities to accept anything other than cash or cheques. Unlike M & S I can hardly boycott DD's school or not let her have school lunches, go on trips etc.

I avoid direct debit. As far as I know, direct debit gives them the right to withdraw money from your account, and you then have to challenge it afterwards, but you have signed your rights away. With a standing order, you decide how much and when it is withdrawn. Standing orders are safer.

I would always use a cheque for a magazine subscription, as in the worst case, your downside risk is limited, and even if lost it will most likely never be fraudulently cashed. Giving your card details by post, opens you up to greater risk.

Standing Order is controlled by you (you set the amounts and dates and can cancel it at any point). Direct Debits are taken from your accoutn by the recipient, amounts and dates controlled by them (with your agreement, and subject to lots of controls).

"As far as I know, direct debit gives them the right to withdraw money from your account, and you then have to challenge it afterwards, but you have signed your rights away"

No, you haven't. The Direct Debit Guarantee (use those precise words) means that contested payments have to be refunded to you by the bank, who then pursue the merchant. They all try to wriggle out of it: read the Financial Ombudsman's take on it here.

"how can someone misuse a cheque sent through the post? If someone had opened the envelope and got my card details, surely there is more scope for misusing those then a cheque?"

What can they do with card details, but without your CV2? They can't use it online (no CV2). They can't make a magnetic-stripe only copy and use it in a cashpoint that hasn't gone to chip and pin (no PIN). They can't use it to do mail order (has to ship to your address without extended validation). They might be able to make a physical copy of a card and use it in for a cardholder-present transaction in a shop outside Europe staffed by Jack Dim of the Dim Family who's operated Dim Ltd forever, but the chances of (a) them getting any money and (b) you suffering a loss are infinitesimal.

By contrast, cheques are easy to misuse. For a start off, they're not physically very secure, so given a cheque you've filled in, I've got everything I need to make a convincing copy. Not many people write with inks that aren't soluble in something. They're not tied to your address, so if I can modify or copy a cheque in your name, I can have the stuff shipped anywhere and, critically, the bank won't know. For lower-value cheques, they aren't checked for signature, figures and words disagree or anything unless contested: they're paid at the value declared on the paying slip. They're really, really insecure.

" How are you going to persuade schools, clubs, associations etc to change from using cheques? "

Parentpay's working well. We haven't written a cheque to our daughters' school for a year or more - they use it for meals, trip, music lessons. It saves them work, gives them better governance and shifts the hassle of chasing bad cheques (which do happen) to the collector. Even in a small school (~600) it's saved huge amounts of work, more than enough to pay for the fees that are charged.
I think there's been a couple of ad hoc things where a teacher's organised tickets and asked people to pay him directly, but that's often requested cash anyway.

Clubs and associations? Let's look at our joint account...

Amateur orchestra that meets on Mondays and charges a fee to the players for the rental of the school hall: BACS. Society for people who play a particular reed instrument: BACS. Car owner club: BACS. Botanic Gardens: Direct Debit. National Trust., NCT, YHA: Direct Debit. That's organisations from fifty members to le toute classe moyenne, all done on-line.

We pay Guide/Ranger subs in cash, and write cheques for camps. I think that's the last organisation.

here are some problems with direct debit. Not sure if they have subsequently tightened the system up.

news.bbc.co.uk/1/hi/uk/6513037.stm

smaller organisations can't generally afford direct debits (banks do serious credit checking and ask for bonds) which means if you rely on BACS or standing orders, you have very little control over who is paying when. We've recently stopped all standing order payments as you didn't know someone wasn't paying till they hadn't paid ifswim, which meant a lot more admin.

can't affrd to accept direct debits that should say

no you are most definitely NBU, I have four people I need to pay a cheque to this week, and for varying reasons can't give cash, bank transfer mainly due to not trusting post/DS however despite phone the bank 3 times over four weeks I still don't have a new cheque book, I'm very

The fact that my last cheque was used to pay a deposit that it was insisted was paid by cheque just go to show how much they are still needed if not the most popular method of payment!

No one's saying DD's don't occasionally go wrong. But so do other means of payment: perfection is very expensive to achieve. To us, with (counts) 30 DDs, the risk is worth it for the time saving, but others may disagree.

And that's fine. If you don't like DDs, don't use them - they can be tricky for people who run accounts close to their overdraft limit, even if nothing goes wrong. And they can be screwed up, or have unintended consequences (like renewing insurance when you don't want to).

If you'd rather by mailed an invoice and settle by BACS transfer, that's fine: you could do the whole lot in a single run twice a month, and everyone would be happy. No cheques, no paper, no reconciliation, no DDs. Once you've set a recipient up it's 30 second per bill. That's how we pay our credit cards - a DD for the minimum payment in order to avoid Bad Shit, but BACS transfer the full payment a few days before the minimum payment is triggered. We can't have a DD for the full amount because sometimes we don't settle the bills in full, or won't be able to settle them before we've transferred money, filled in an expenses claim, or whatever.

Surely to God there isn't anyone left settling credit card bills with cheques in the post? Why?

"We've recently stopped all standing order payments as you didn't know someone wasn't paying till they hadn't paid"

How does that differ from cheques?

But isn't it the case that if things go wrong with direct debit, that it can be much worse than if they go wrong with other methods of payment? Isn't teh downside risk greater with direct debit? Direct debit is convenient for the large recipient companies, but is it really that beneficial for the small individual?

"But isn't it the case that if things go wrong with direct debit, that it can be much worse than if they go wrong with other methods of payment? "

Why?

I'm not that interested in DDs, but I know people who've worked in the area. Responsible banks and responsible vendors fall over themselves to correct mistakes (which often happen at one remove from the DD per se: the classic problem is meter misreading). But when you get behind complaints, there's usually more to it than meets the eye, and the comments section on the page you linked to is a feast of them.

There are occasional errors where the invoice is for £20 all the way up to the point it its becoming a DD, whereupon it becomes £200, or where someone puts the wrong details on a form by one digit. Bad, bad, and easy to fix. DD Guarantee makes it clear where the responsibility lies, unless you want to posture and say "Eventually I was told to reclaim the money by filling in a form etc. I was annoyed and told them I expected to be reimbursed without filling in forms", rather than "I've had problems with Direct Debits, where companies have taken the wrong amount, but I have to say that my bank handled them flawlessly".

There are nastier errors where a meter mis-read or something similar causes the invoice to rise, and the payment that is taken is "right", in that it matches the invoice, but "wrong", in that the invoice is wrong. The DD Guarantee is supposed to resolve this, but it's true that sometimes there's some arguing the toss. Oddly, credit cards are better here: a contested transaction is chargeback'd immediately and the merchant has to re-present, whereas with DDs it seems to be a bit more chaotic. But on the other hand, the merchant has to give notice (28 days, I think, but it might be less) of changing the sum they're going to collect, so they could argue that you should have noticed the problem at that point. But I agree, it's not ideal.

We get email from most of the DDs we have prior to collection, or letters in a few cases. It's as well to stay on top of those, and I can see that for some people they may prefer to BACS the invoice amount.

As an aside, since you work in the field of electronic payment, do you know why we haven't got an electronic cash system yet? Surely, it is technologically possible? What is holding it back?

Because retailers and consumers haven't wanted it. It's been tried several times over the last ten years and never taken off (Mondex and so on). It MIGHT start taking off off of the back of the Oyster card system and contactless payments, but takeup doesn't seem that high so far.

Almost all new eftpos terminals being installed are online - and more that perform transactions over broadband instead of dial up are being installed.

If there is queue building up and everything is slow, it's almost ceratinly not due to the retailer having issues, but due to there being problems at the other end.

This is based on the eftpos operation of one of the major retail banks in the UK.

I wonder if the banks are against the idea of electronic cash. There was talk of companies like Microsoft effectively being banks and running electroni cash systems. maybe that doesn't suit the dinosaurs?

Surely it would be safer to make micropayments on the internet for subscription to 'The Times' etc. by using an ecash system which did not involve handing over all of your card details and CV2 numbers etc. for just a £1 payment. You would have thought that ecommerce would boom if there was a safe system which did not involve handing over all your details, which many people think is risky.

The banks would love it. Cash handling is expensive. Each ATM has got approx £250k in it that they can't be investing elsewhere.

Ecommerce is pretty much booming anyway. If you need to take micropayments the thing to do is to attach to an existing platform that is already trusted by the customer. Paypal is one. Amazon is another. I've bought screws from Amazon.

Electronic cash, as in an alternative currency as opposed to just replacing cash with electronic transactions also already exists. Wii points, Xbox points, WoW gold - all these can be exchanged for real currency. You just can't but chocolate bars with them. If they do become full fledged currencies, then they will get the same regualtion, tax etc as any other. Which means the banks would end up running them anyway.