Tan Kin Lian's Blog: Encourage electronic cheques

Sunday, November 08, 2009

Encourage electronic cheques

Printed in Straits Times Forum Page on 7 November

In spite of the technological advances, many people still write cheques to pay their bills, especially for the irregular payments. This manual mode of payment is inefficient, costly and time consuming.

I urge the Infocomm Development Authority and the Monetary Authority of Singapore to introduce a convenient way for the public to pay their bills electronically, and make it as simple as writing a physical cheque. This should be done through a common platform that serves all the banks, instead of asking each bank to develop its own application.

The payor should log into his bank account and write an e-cheque by indicating the party and amount to be paid, and details of the payment. If there is a mistake, the payor should be allowed to cancel the e-cheque within one day.

The payees should have the facility to log into the platform to view the details of the electronic payments that are credited to their accounts, similar to clearing their incoming physical mail. They can accept or reject the payment. For example, they may wish to reject a payment that does not have sufficient details to identify the transaction.

The use of a common platform will make the new system adopted more widely in a short time. It will also reduce the implementation cost of the participating banks.

The current form of internet banking was not designed to serve the needs of commercial organisations, which explains why so few organisations ask their customers to pay through internet banking. I believe that a new system, as described above, will overcome the current shortcomings.

Tan Kin Lian

11 comments:

Anonymous said...: Computerise not to help u, but to help themselves?
You think they will chang?; November 08, 2009 8:55 AM
Anonymous said...: There are legal and administrative issues.
If you are admitted to hospital, and are unable to give a personal undertaking that you will pay for the charges, a friend or relative has to provide some form of deposit.
This usually will be his/her credit card or ATM card.
Eventually, that deposit will have to be returned to your friend or relative. So, what does the hospital do?
They send you a cheque, in your name, and let YOU sort it out.

Same goes for insurance companies.
They will pay you via cheques. ( for whatever reasons)

No commercial entity will risk legal issues for not paying, so a cheque is still the best way to record payment. The drawer can extract records easily from his banker that payment was indeed completed.
With electronic transactions, it gets tricky. You will need statements from your banker to confirm the transactions and they charge a hefty price for that.

There are easy ways with new technology, but there are also heavy charges to do this and that.

The paper cheque will not go away for another 200 years.. ask the Association of Banks, if they dare, they will explain in simple language.; November 08, 2009 9:54 AM
Vincent Sear said...: All insurance companies I know of allow clients to nominate a bank account number for direct payments of refunds, claims, cash bonuses or payouts etc. during their lifetime. The problem comes with a death claim. They can't pay to the dead client's bank account anymore. They have to pay the beneficiary claimant.

Electronic payment transfer systems are technically so well developed today. The payee just need tell the payor the account number and it could be done in a snap. However, there're limitations. For example, people have some resistance to telling others their account numbers, there're transaction amount limits set by the banks to protect themselves and customers from large-sum fraudulent transfers.; November 08, 2009 2:17 PM
Anonymous said...: Some things can never be done away with.

When computers first entered the office environment, they were touting and talking about a paperless office. Now we are producing more printouts and unneccessary documents than ever before.

Another trend I cannot help noticing is that in the push to cut back on the use of plastic bags, almost every Tom, Dick and Harry doing business are now issuing customers with 'reusable green bags'. This has given rise to a situation where so many 'reusable plastic bags' are given away that we are starting to see these bags being thrown away as well.

Will we solve the plastic bag problem? I doubt. These 'reusable green bags' are not cheap and I wonder who ended up paying for them. The biggest winners are the factories churning out those bags.; November 08, 2009 3:19 PM
Tan Kin Lian said...: I am asking for another channel to make it easier for consumers to pay to businesses using e-cheques.

I am not asking for manual cheques to be replaced entirely - this will never happen.

I am also not asking for e-cheques to be used in situations where a manual cheque is a better choice, e.g. in making refunds to consumers.

I hope that people can think more broadly. Do not have a narrow mind when you respond to suggestions - which seems to be quite common in Singapore (perhaps due to our education system).; November 08, 2009 3:45 PM
Vincent Sear said...: I really don't quite understand what you're suggesting. Transferring money to counterparties' bank accounts or paying bills to corporate payees, executing and viewing the trsnsactions online, all these have been available and I've been using them for more than a decade.

The only limitations I encountered was limits on online transaction amounts (for security's sake) and sometimes unwillingless of the payees to disclose their bank account numbers. Both are valid concerns and fair limitations.

If your idea of "e-cheque" is more than that, I'd glad to hear you share and elaborate further.; November 08, 2009 6:17 PM
Louis said...: I agree, I was quite surprised when I arrived in Singapore that it is quite difficult to transfer money between banks. In my country cheques are used very little. Bank transfers are used to pay bills. Here it is quite difficult to do if your bill is payable at a bank other than your own. In fact I have been advised that the most cost-effective way is to withdraw the cash, walk to the other bank and deposit it again.; November 08, 2009 7:19 PM
Anonymous said...: There are always the AXS machines.; November 09, 2009 3:24 AM
Anonymous said...: REX comments

I think the post as published in straits times is quite confusing. It fails to highlight the REAL issue with the current system which is actually not too bad. The real problems are summarised as follows:

1. VERY slow interbank clearance of electronic fund transfers between dis-similar banks. It can take 3 days sometimes if there are public holidays involved!!

2. Not possible to epay to less prominent entities. E.g you still have to pay Condo maintenance fees by cheque. You can't giro, you can't do ebanking because these entities don't appear on the drop-down list box which only have the famous organisations there...

The post also proposes the creation of a new "platform" whatever that means, so that the above transactions can be effected. I believe there might be cheaper ways than to devise new platforms, therefore, the letter to the press would have served its purpose better if the above two points are highlighted, rather than attempt to tell the authorities what exactly to do, which is the most fatal mistake since our million dollar government cannot lose face, they like to feel smarter than us mortals!

REX; November 09, 2009 9:12 AM
Tan Kin Lian said...: REX
I wish to give my views without worrying about things like "face of million dollar government" etc.

The current internet banking, which I use quite often, has certain useful purposes, but cannot serve other areas, such as those that you have mentioned.

Why don't you write a follow up letter to the Straits Times to explain the issue as you have stated here.; November 09, 2009 9:46 AM
Anonymous said...: REX comments

i'll wait till the authorities comment on your letter and see how it goes. it might be pre-mature to add on to your letter in the straits times, at this juncture.

REX; November 09, 2009 2:17 PM