Do you still use cheques?
For Generation Z individuals, the concept of a cheque may be similar to a cassette player or a CD player – something that they have heard of but never used.
It is a fact that cheques are no longer fashionable in this day and age, where we all try to go cashless and make digital payments for almost everything.
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Cheques will slowly be phased out in line with the societal requirements regarding payment methods.
If you want to continue using them, there will be additional charges.
Here is what you need to know about this cheque issue.
MAS Announces That All Corporate Cheques Will Be Eliminated by End-2025
Yesterday (28 July 2023), the Monetary Authority of Singapore (MAS) announced some changes to how cheques will be used in Singapore.
The MAS is Singapore’s central bank and integrated financial regulator and promotes sustained, non-inflationary economic growth through monetary policy and close macroeconomic surveillance and analysis.
The first big announcement regarding cheques was that corporate cheques would be “eliminated by end-2025”.
Banks will no longer issue new chequebooks to all corporate in 2025 once their electronic deferred payment (EDP) solution is up and running.
Also, Singapore’s Domestic Systematically Important Banks (D-SIBs) will “commence charges for SGD-denominated cheques issued by corporates” by 1 November 2023, with other banks to follow suit by 1 July 2024.
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There will also be charges for SGD-denominated cheques deposited by corporates, with such charges implemented in phases.
Remember your economics lessons? This means there are no longer economies of scale to processing cheques in Singapore since cheque usage is weak.
Indeed, the MAS provided some statistics to substantiate its need to increase cheque processing fees. It shared that the “annual cheque transaction volume has declined by almost 70% from 61 million in 2016 to less than 19 million in 2022”.
Individuals Can Still Use Cheques at a Fee
While corporations may no longer use cheques by end-2025, individuals can continue to use cheques for a period after 2025.
It was not specified how long this period would be.
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However, the extra-charge catch still applies to individuals as it does to corporates. So take note before you happily issue a cheque and get slapped with additional costs.
This fee is to cover the cheque processing costs, as the cost of processing each cheque has been rising with the “cheque usage in Singapore falling steadily”.
Support for Transition Away From Cheques
To facilitate this transition from cheque usage, the MAS revealed that it is in close partnership with The Association of Banks in Singapore (ABS) and financial industry and government agencies to ease the transition.
The ABS was established in 1973 and plays an active role in promoting and representing the interests of the banking community in Singapore. It works closely with the relevant government authorities towards developing a sound financial system in Singapore.
Some plans these institutions have underway include a “specific e-payment solution that can serve as an alternative for post-dated cheques” to “provide greater convenience to corporates and individuals”.
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