December 16 2009.

The Forum of Private Business (FPB) has responded to the Payments Council's decision to phase out cheque payment by 2018.

The FPB understands many business owners, voluntary groups and other cheque users may have serious concerns over the decision.

However, the small business support group believes the move can be a relatively painless one if the banks come up with a simple and convenient alternative.

FPB Policy Representative Matthew Goodman said: "Around half of our members still use cheques and we fully appreciate that many individuals, particularly older people, rely on their chequebooks to make payments.

"However, cheque use is becoming an increasingly expensive option for businesses. And as cheque use declines, the banks will impose ever-greater costs on the firms who still use them.

"It would be easy simply to criticise the Payment Council's decision. Instead, we are taking a pragmatic approach based on the reality for small businesses.

"We believe that the better option is to use the publicity this issue has generated to pressure the banks into coming up with practical, convenient and cost-efficient alternatives to the cheque - a 'third way' which will benefit all parties concerned.

"A possibility on the horizon is a paper-based payment system which will be little different from the cheque in practice but will cut out the expensive and time-consuming clearing process."

Mr Goodman added: "The Payments Council has said it will only take a final decision to phase out cheques in 2016 if it is satisfied the banks have put viable alternatives in place.

"We will be working with them, and our members, to make sure this is the case."