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(iii) Cheques Act 1992 and Jack Committee Report
The negotiation or transfer of a cheque, by interposing a holder, or series of holders, between the drawer and ultimate payee, clearly increase the possibility of fraud or irregularity along the chain of transmission. The Cheques Act 1992, which amends certain provisions of the Bills of Exchange Act 1882 and of the Cheques Act 1957, prohibited transfer by the pre-printed words ‘A/C Payee only’. Such a cheque now has the same effect as one in which the words ‘Not transferable’ appear on the face of the cheque or a cheque on which the word ‘only’ is added after the payee’s name. The non-transferable cheques can prevent the offence of forgery since there cannot be a forged or unauthorized indorsement where there is no indorsement. The Jack Committee Report steps further than Cheques Act 1992. Given that transferability and negotiability are two attributes of a cheque, which render it unsatisfactory as a safe means of payment, and amendments do not provide a complete answer, the Committee proposes there is still need a new instrument without the characteristics of transferability and negotiability, and hence further reduce the opportunities for fraud.
II. E-Payment Instruments
Cheque use has been falling in the UK every year since 1997 as more and more companies recognized the increased convenience and cost savings, which can be achieved from electronic payment methods. The e-payment instruments fall into two categories: (1) Plastic cards (off-line payment instrument) and (2) Remote Payment (on-line payment instrument)
(I) Plastic Cards (Off-line Payment)
Plastic cards (Payment cards or Plastic bank payment cards), pieces of plastic fitting in a wallet or purse that could be used to pay for the goods or to acquire services, saving the cardholder the inconvenience of carrying large amounts of cash, are widely used in various types of transaction now, especially in retail payment environment.
Status quo
There are over 137 million plastic cards in issue in the UK; 90% of adults hold one or more plastic cards. In a milestone for plastic card use, in 2001 for the first time more than half of all non-cash transactions in the UK were made with a debit, credit or ATM card. Plastic cards can be categorized to:
Store card: the oldest form of payment card that is also known as a retailer card. Store card is a plastic payment card that can be used only in a specified retailer or group of retailers.
Credit card: issued by a bank or other financial institution. Cardholder can utilize the card to purchase goods or to acquire services within a specified credit limit. The cardholder is required to sign a receipt printed by the terminal with the date, the time, and the amount of the transaction. The sale person verified his signature by comparing it with the one on the card back. The retailer retains one copy and the other is handed to the customer.
Debit card or ‘EFTPOS’ card: used by holder to purchase goods or to obtain services in designated retail stores in EFTPOS network. The statistics from the APACS proved that debit cards are the fastest growing payment method in the UK. Payment volumes rose by 15.4% last year to 2.7 billion.
Charge card or T&E (traveling and entertainment) card: a variant credit card. The procedure for its use is the same as that described, except that the holder is expect that the holder is expected to settle promptly and in full when the account is periodically submitted to him by the issuer.
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