The unique British institution – the cheque – will be phased out by 2018.

The Payments Council Board has a set a date by which time it hopes the cheque book will be phased out in the UK – 31 October 2008.

After an 18-month consultation to review how people still use cheques and their reasons for doing so, the Payments Council Board has taken the decision to set a target date to close the central cheque clearing department in 2018.

For over 350 years, the cheque has been a British institution and in 1990 11 million cheques were being written every day. However, with the introduction of quicker, easier methods of payment, this figure fell to just under four million in 2007-8, a statistic which quickly encouraged retailers to stop accepting cheques.

Chief Executive of the Payments Council, Paul Smee, commented: “This announcement marks the start of extensive work that we need to do to ensure that everyone has a viable alternative, should the cheque clearing close.

“The real challenge lies ahead if we are going to be comfortable to wave good-bye to the cheque, which undeniably occupies a unique place in British culture. The payments industry will have to react positively and take the lead on delivering solutions which suit all their customers.”

The UK’s largest charity working with and for older people, Age Concern and Help the Aged – which recently combined forces – is concerned about the impact the decision may have on older people who rely heavily on cheques and cash.

Andrew Harrop, Head of Public Policy at the charity said: “Our fear is that setting a date will give the green light to banks and retailers to withdraw cheques even earlier than 2019, as some already have.

“It is vital that before cheques are phased out, the Payments Council ensures there is a practical, safe, paper-based alternative in place which serves the needs of this group.”

The Payments Council assured that groups such as the elderly and those with disabilities were included in its consultation process. Mr Smee said: “I know that the Payments Council Board will pay particular attention to check that the needs of disadvantaged customers are addressed.”

The Forum of Private Business (FPB) said it supports the decision to abolish the cheque as it says the news may encourage banks to be more innovative with regards to payment types and it could even help businesses be more cost-efficient.

“Cheques are generally the most expensive method for businesses to process and those costs are only set to rise as fewer and fewer people use them,” commented FBB Policy Representative, Matthew Goodman.

“The Payments Council needs to be confident that the decision will lead to practical and convenient alternatives being put in place. If they set this roadmap, then onus will be on the banks to come up with solutions for the many small businesses that still use cheques.”

A review date of 2016 has been set by the Payments Council to allow it to check the progress of the withdrawal.