The decline of cheque use is far greater threat to sector
Wednesday, November 7, 2012
To print cheques you have to become an accredited printer, and in the UK, the Cheque Printer Accreditation Scheme (CPAS) is run by us at the Cheque and Credit Clearing Company. The purpose of the scheme is twofold: to make life more difficult for fraudsters by maintaining the highest levels of security standards on the paper cheque and to reduce the possibility of errors.
To become an accredited cheque printer, you need to comply with certain requirements. These cover the type of paper used, the security features incorporated within the cheque, the type of ink used and the storing of cheques. Our accredited printers are able to print all kinds of cheques and credit slips for the banks and financial organisations who issue them. These include banker’s and building society drafts, traveller’s cheques and postal orders.
The CPAS, which was set up in 1995, is extremely effective, and combined with manual scrutiny undertaken by bank staff, over 90% of all cheque fraud attempts are spotted when they enter the clearing process. Despite all this good work, in the first half of 2012, overall cheque fraud losses increased by 9% from £16.4m in the first half of 2011, to £17.9m this year. Within this, counterfeit cheque fraud increased from £2.5m to £6.5m in 2012, an increase of 156%.
This is mainly because the quality of counterfeits produced by the organised criminal gangs behind these crimes has improved markedly. However, the industry continues to work hard to spot and stop fraudulent cheques as they go through the clearing process and we will continue to work with cheque printers to identify ways of improving security features in cheques. In addition, the banking industry’s sponsored police unit recently had a major success closing down a national counterfeiting gang’s factory operation.
A question we have been asked as a result of this recent increase in counterfeit fraud is whether the availability of approved cheque paper on the internet has opened up more opportunities for fraudsters, and whether this in turn is degrading business for accredited cheque printers. But the truth is, on both counts, that it hasn’t. This is because, regardless of the internet, the paper used – CBS1 for cheques and CBS2 for paper credits – is also used for a wide range of other applications and so it isn’t difficult to obtain. It’s true to say that the enterprising fraudster could obtain this security paper without too much trouble, but this is only a small step in producing a fake cheque and attempting to pass it through the clearing undetected. There are many other hurdles the fraudster would need to negotiate.
As a result, I’d challenge whether a rise in counterfeiting has made a direct difference to the business of our cheque printers. Of far greater effect is the ongoing decline in cheque numbers. Since its peak in 1990, cheque use has declined dramatically and this looks set to continue.