It's farewell to the cheque as cards rule

Major high street stores demand cash or plastic

It began with a sum of £10 drawn on Messrs Clayton and Morris, scriveners, bankers and estate agents, in London's Cornhill in 1659. It is ending at the checkouts of Tesco and Marks & Spencer. The cheque might soon not be worth the paper it's written on.

This week the Payments Council, the official body which sets strategy for UK payments, ends a consultation exercise on whether to 'manage the decline of the cheque'. Tesco will ban cheques at its 2,000 stores on 25 February, followed by M&S on 1 March. They join Argos, Asda, Boots, Currys, Morrisons, Next, PC World, Sainsbury's, Shell garages and WH Smith in insisting on cash or plastic.

The retailers claim they are responding to consumer preference for chip-and-pin payments as quicker and more convenient. Only 4 per cent of retail spending is still done by cheque, compared with more than 60 per cent by debit or credit cards, according to the payments association Apacs. Only one in eight regular bills is paid by cheque, compared with one in three in 1995, a figure predicted to become one in 22 by 2016. Apacs estimates that personal cheques will account for only 2.3 per cent of all non-cash payments made by individuals by 2016.

Such trends have been accelerated by internet banking and direct debit payments. BT was criticised last week for increasing charges for customers who choose to pay by cash or cheque and ask for a monthly printed bill.

The word 'chequebook' first appeared in Thackeray's 1848 novel Vanity Fair and can boast a cultural heritage including the Blankety Blank chequebook and pen. The cheque began life in Britain at the time of the Civil War, when goldsmiths' safes were secure places to deposit jewels, bullion and coins. Instructions to goldsmiths to pay money to another customer developed into the cheque.

The earliest known handwritten cheque is for £10. Dated 16 February 1659, it was drawn on an account at Clayton and Morris, a goldsmiths' bank wound up in 1730. The oldest in the Bank of England Museum in the City of London - for £200, dated 8 December 1660 - was also drawn on Clayton and Morris. Written by Nicholas van Acker, it was made payable to a Mr Delboe or order.

In 1762, Lawrence Childs came up with the idea of printed cheques with serial numbers to allow bank staff to keep track of them. But as more banks printed their own, armies of messengers had to scurry from one bank to another, exchanging cheques and collecting cash. One day, according to banking legend, two exhausted messengers were taking a break and drinking ale when they recognised each other across a crowded tavern. The pair realised it would be easier to meet every day at the same place to exchange all their cheques. Soon all the messengers were meeting at the Five Bells tavern; the renting of a room for this purpose first occurred in 1773. The first clearing house building, initially owned by a group of private bankers, was built in Lombard Street in 1833 and did not close until 1994.

The first chequebook was issued by the Bank of England in 1830, but it was not until the late 19th century that cheques started circulating widely. In the 1920s and 1930s, businesses printed cheques incorporating their own advertising and logos. In the 1960s, there was a marked rise in the number of bank account holders after cheque guarantee cards were introduced.

Cheque volumes peaked in 1990, when 11 million were issued each day - the figure is now down to 4.9 million and is expected to be 2.3 million by 2016.

One of the best collections of cheques is held by Coutts & Co, the private bank in London. Perhaps the prize item is a cheque made payable to Charles Dickens by Angela Burdett-Coutts, who helped educate his sons.

Krishan Rama of the British Retail Consortium said: 'Fewer and fewer people want to pay by cheque. This trend has been going on for decades and will probably continue. There has been no drive by retailers to "kill off cheques" - it is customers who have rejected them.'

Concerns have been raised that elderly consumers could be left behind. David Sinclair, head of policy at Help the Aged, said: 'Older people are much more likely to use cheques. We did a small survey about alternative payments last year and found 45 per cent said they struggle with Pins. Anyone with low-level dementia struggles with Pins and there are 750,000 people with dementia in Britain.'

In any case, 'the cheque's in the post' looks set to become a phrase of the past. Cheques have been known to bounce, but seem unlikely to bounce back.