Last December we published an article asking 'Is time up for the humble cheque?'. We took a look at global trends towards fully digital payment systems and suggested that the paper cheque might be going the way of the dodo.
In the case of Australia, we said that no date had been set, but the conversation had started between the Reserve Bank of Australia and other stakeholders.
Six months later, Treasurer Jim Chalmers has put a stake in the ground by declaring his intention that cheques will be phased out in Australia by 2030 at the latest.
Why make the move?
When making the announcement, Chalmers justified the move by saying that:
- Usage of cheques has been declining, and they now make up only 0.2% of payments
- Digital transactions are easier, cheaper and more accessible.
His analysis:
Leaving cheques in the system is an increasingly costly way of servicing a tiny and declining fraction of payments.
This illustration from the ABC News article about the announcement illustrates both the changing Australian consumer payment landscape over the past 15 or so years, and the small role now played by cheques.
What are some of the risks?
Our December article included a cautionary tale from the UK. A 2010 announcement that cheques would be phased out was followed by a humiliating backdown in 2011 after protests from charities, small businesses, and older people.
Coincidentally, I was in the UK at the time of the recent Australian announcement and had some first-hand experience of the challenge. My 90-something-year-old mother had to make a large and urgent payment. The bank suggested visiting a branch an hour’s drive away, or using Internet banking, neither of which she was physically capable of doing.
We solved the problem with the only other option we could find – putting a cheque in the mail.
The government is presumably banking on problems like this being solved over the next 7 years, but while this cohort may be in decline, they and their supporters have surprisingly loud voices!
Orchid’s EFT Solutions
The paper cheque may survive longer in countries like Canada and the US, but the writing is on the wall. Small and medium-sized businesses have been taking matters into their own hands for years.
The benefits of replacing paper cheques with Electronic Funds Transfer (EFT) are clear, particularly where most payments are business-to-business, or employer-to-employee, and the impediments that gave the UK pause for thought are less of an issue.
EFT Processing, the leading Sage add-on from Orchid Systems, has helped thousands of businesses make this transition.
Fully integrated with Sage Accounts Payable & Accounts Receivable processing, it creates EFT files in the format required by your bank.
800+ bank formats are already supported, with new ones created on request.
- EFT Processing for Sage 300, which also works with Sage 300 US & Canadian Payroll, has been established for over a decade.
- EFT Processing for Sage Intacct is a more recent addition to the Orchid portfolio, but is already making its mark.
