Editorial | Cancelling cheques requires clear road map
- As the end of cheques approaches, the Hong Kong Association of Banks will need to avoid disruption and inconvenience in the transition from traditional paper to electronic payments
Cheques are going globally the way of dinosaurs. The Hong Kong Association of Banks (HKAB) is just moving with the times as it is working out a road map to phase out their use. Some customers and institutions such as schools may still use them regularly. But money-transfer technologies nowadays are secure, easy to use and highly accessible. Payment and transfer systems such as PayMe, Faster Payment System (FPS) and e-wallets such as Alipay and WeChat Pay are popular.
It may take some time to ease everyone into electronic money. Many schools, for example, still ask pupils and their parents to pay for incidentals such as class trips and donations in cheques. Some property agents like to keep cheques as deposits from buyers without cashing them until a transaction is finalised. But property developer New World Development has experimented selling flats completely online without taking cheque deposits.
Since FPS was introduced to enable instant, costless transfers in 2018, cheque usage is down by 34 per cent. FPS transaction volumes, meanwhile, have jumped 12-fold since its launch in September 2018. Allowing consumers to transfer money between banks by mobile phones, the system transacted HK$430.24 billion (US$55 billion) in December, an increase of 39 per cent year on year.
The trend towards e-transaction systems especially took off during the three years of Covid isolation. As a result, cheque usage shrank to HK$488.6 billion in December, a 13 per cent drop year on year.
That is the worldwide trend. Many countries are moving ahead with plans to consign cheques to history amid the popularity of digital payment methods. For example, Australia plans to wind down the use of cheques generally by 2030. Singapore will scrap corporate cheques by 2025, but allow individual use, with users paying a fee.
The HKAB will consult members and develop a transition road map. That is necessary. There are various options which must be considered carefully to avoid disruption and inconvenience to people. An easy one is to charge clients who want them, as the need for cheques will gradually disappear with the proliferation of digital payment platforms.