POSTAL CHEQUE SYSTEM.
REPORT OF A COMMITTEE OF THE POST OFFICE
ADVISORY COUNCIL.
REPORT.
In accordance with the wishes of the Council at the 24th meeting
held on December 15th, 1926, we have considered the question of
instituting a Postal Cheque System in this country and we report
as follows :—
1. Inquiry into Existing Systems.—As a preliminary to our
investigations a questionnaire was circulated to the leading con-
tinental countries using Postal Cheques. Summaries of some of the
figures collected are attached as appendices to this report.
2. Success of Postal Cheque Systems Abroad. —From these figures
and from other information obtained it appears that the Postal Cheque
System operates on a widespread basis in these countries and in most
cases is run at a profit. -It is noteworthy, however, that in Germany
where Postal Cheques have been most developed losses have been
sustained, which are understood to have amounted to the considerable
sum of 16,000,000 R.M. in 1926 and to a similar large figure in 1927.
3. Factors in Profitable Working. —It is evident that the financial
success or otherwise of a Postal Cheque System turns very largely
apon the interest on current balances which is credited to the system
and consequently upon the size of the average balance kept in the
individual accounts. Where this is comparatively large, expenses
can be met with the addition of reasonably low charges upon
individual transactions. But if the average balance is small, the
system can only be made to pay its way by raising the transaction
charges to an unduly high level.
4. Development of Banking on the Continent.—In continental
countries commercial banking facilities are less developed than in
this country. Not only are there fewer branch offices per head of
population but the procedure of payment and acceptance of cheques
is in some cases encumbered by additional formalities and delays.
The Clearing House system is only in embryo on the continent and
the number of ordinary cheques in use, so far as can be ascertained,
is very small compared with those circulating in this country. Postal
Cheque facilities consequently are likely to attract a greater number
of good accounts in continental countries than in Britain where the
needs of a considerable section of the moneyed population are already
catered for. Unless, therefore, the facilities offered by a Postal
Cheque System in England were such as to compete advantageously
with commercial banks or to break fresh ground, it seems probable
(13497C) Wit. 7972/4541 2000 7/28 Harrow G.811
