When is a cheque guarantee card, not a cheque guarantee card? When you try to buy a money order, postal order, sterling postal order and Western Union money transfer at An Post with an accompanying cheque.
Family Money discovered this extraordinary An Post rule last week when we unsuccessfully attempted to buy a £35 sterling postal order at the local post office to send to a company in Essex.
To place our order, this company would only accept sterling postal orders or bank drafts. Since the Post Office was nearby we opted to buy a postal order.
With only £20 in cash at hand, we asked if An Post would accept a credit card, Laser card or cheque as payment. No, no, no. "We don't take any of them. Cash only," replied the postmistress. When asked why a valid cheque and cheque card was not acceptable, she offered no explanation so we asked her to contact An Post for one. Returning from the back office, she soon announced: "They say it's for security. Your card isn't secure enough." According to An Post's spokeswoman, the postmistress was correct in refusing the cheque. Sterling postal orders and Western Union money transfer transactions were added last year to the list of negotiable cash products for which only hard cash will be accepted at post offices, she said. The others are money orders and postal orders.
The official reason for the chequecard ban for these four products is twofold: "It is not usual procedure within the banking industry to pay for one money transmission product (like a sterling postal order) with another transmission product", like a cheque. This is because money orders, postal orders, etc, are immediately negotiable, she said, whereas a cheque must clear the banking system which takes three working days. The other reason is that while An Post accepts cheque payments for all its other products stamps, package delivery, savings certificates, savings bonds, prize bonds, account deposits, TV licences, and to pay bills like utilities post offices are not issued with the standard stolen/lost cheque and credit card lists that are issued by the banks. "The reason is time, it takes time to check these lists and customers complain about long queues." Family Money asked the two main banks, AIB and Bank of Ireland and the Irish Banks Information Service to comment on An Post's assertion that the cheque guarantee system is not secure enough for the purchase of other money transmission products and about its claim that as a matter of procedure in the banks, cheques and the like are not usually used for purchasing other negotiable instruments like sterling drafts or money orders.
Spokesmen for the banks expressed surprise that An Post discriminates against cheque cards and said that if the cheque guarantee procedure is followed
that is, the retailer (in this case the Post Office official) satisfies herself that the signature on the card matches that on the cheque and the card is a valid one (i.e. the expiry date has not passed) any cheque with a face value of £100 or less will be honoured by the bank.
Where there is a dispute over the veracity of a signature, the bank's fraud department investigates and they make a final decision about whether the cheque is honoured, said the Bank of Ireland spokesman. If the card has been stolen and the signature is fraudulent but well forged, the bank would, more than likely pay up. (TSB Bank has strengthened the security of its system even further by putting customer's photographs on their bank cards.)
The spokesman for the Banks Information Service told Family Money that there is no policy within the banks against using a money transmission product like a cheque to buy drafts or money orders. The purchase of travellers' cheques by ordinary bank cheques being a very common example at this time of year.
He expressed surprise that given the high volume of cheque acceptance generally at An Post, that post offices do not use the lists of stolen and lost cards that are made available by the banks.
"The last major initiative against card payment fraud undertaken by the banks was about five years ago," he said, "when information videos, written materials and even sticker reminders to put up near cash registers were made available to our retail customers to cut down on cheque and credit card fraud.
"Despite the huge increase in transactions of cheques and credit cards and direct debit cards like Laser the incidence of cheque fraud has levelled out, not increased over the years."
Despite the increased popularity of plastic money which, the IBIS spokesman described "as more secure for a customer than having to carry cash around and one we have a vested interest in protecting", cheques and cheque cards remain the single most popular payment instrument. In 1993, 164 million cheques were written; in 1995 there were 154 million. "I am informed that the 1996 figure [the next to be published] shows that cheque usage is on the way up."
An Post's claim as a third banking force in the State especially in rural areas where fully staffed bank branches do not always exist certainly sounds a bit thin given its lack of faith in something as commonplace as the cheque guarantee system.
However, its spokeswoman did say it will be introducing Laser swipe facilities from August, initially for bill payments and by early next year customers will be able to make all product purchases using their Laser cards. There are also plans to accept credit card payments, but payments by cheque will continue to be excluded for negotiable money transmission products.
Until then, if you need to send an urgent money order especially to a toy company as was the intention of Family Money make sure to bring your piggy bank to An Post. . . and your cheque, credit or Laser card to the bank.
Family Money welcomes suggestions from readers on topics or questions about personal finance they would like to see highlighted. Please write to Jill Kerby, c/o the Irish Times, 11-15 D'Olier Street, or by Fax No. 6798874 or by e-mail: jmkerby@indigo.ie
