Why cheques are checking out
In Australia, and around the world, paper cheques are going the way of the dodo. Is that a good thing?
They were once a mainstay of the banking system, but cheques have been slowly disappearing in recent years.
Their demise in Australia has been hastened by a Federal Government decision that the system will wind down “no later than 2030”. The government itself will stop issuing cheques by 2028.
Federal Treasurer, Jim Chalmers, said in June last year that the government will “manage this transition in an orderly and planned way”.
He noted that only 0.2% of non-cash retail payments in Australia were made by cheque, which seems like compelling evidence to shut the system down.
But is it a case of customers having no option? Many Australians have already been weaned off cheques by their banks.
Among the “big four”:
Commonwealth Bank is advising customers to “cheque out”, taking away access to some customers.
NAB cheque books are no longer available for new personal banking accounts or for existing accounts that don’t already have a cheque book.
Westpac has begun diverting customers to other kinds of payment.
From 16 June 2024, ANZ stopped issuing cheque books to customers who have never had them before, as part of a planned phasing out.
Suncorp, Bank Australia, People First Bank, Rabobank, Credit Union Australia, and Teachers Mutual Bank have already stopped accepting cheques, with Macquarie and AMP to follow suit in November. Bendigo and Adelaide Bank has stopped issuing new cheque books and begun phasing out cheque accounts for many customers.
Australia is not alone in phasing out cheques.
In the United States, cheque use is on the decline. Last year, The Washington Post declared the cheque “dead” but noted that they were still used for one in 20 non-cash purchases. That’s far higher than the rate here in Australia.
The Post added, “Three-quarters of retirement-age Americans still use [cheques], compared with fewer than a tenth of their college-age comrades. It’s also higher among those with more education and higher earnings, regardless of age.”
In the United Kingdom, cheque usage slumped 90% between 2007 and 2022. By 2022, they accounted for 0.5% of payments.
There were plans to phase cheques out by 2018, but public pressure forced the UK Government to relent.
They remain in circulation largely due to the efficiency of the Image Clearing System, set up in 2019, which allows users to deposit a cheque simply by photographing it with their mobile phone.
In New Zealand, most banks and even the Justice Ministry stopped accepting and issuing cheques in May 2021. The Bank of New Zealand describes itself as cheque-free.
Around the world, the transition away from cheques has been linked to the declining use of cash and the movement towards digital-only payments.
One unintended consequence of this has been increased criminal activity. Fortune magazine noted recently that the switch to cashless society has “turned Sweden from one of the safest countries into a high-crime nation”.
The blame has been placed at the country’s BankID digital authorisation system, which has been exploited by cybercriminals.
Fortune reported, “Online fraud and digital crime in Sweden have surged, with criminals taking 1.2 billion kronor [$A170 million] in 2023 through scams... doubling from 2021.
“Law-enforcement agencies estimate that the size of Sweden’s criminal economy could amount to as high as 2.5% of the country’s gross domestic product.”
With a date already set in Australia for the end of cheques, many people – especially those in regional and remote areas – are concerned that cash will be the next to go. (For more information on that, read about NSA’s Keep Cash campaign here.)
We can only hope that our banking system proves more robust and resistant to criminal exploitation than has been the case in Sweden.
