Monday, March 20, 2017

Why are we still using cheques?

A few people have asked - why are we still using cheques which are so inefficient, costly and troublesome? Why can't we move to digital payment?

I agree with them. The infrastructure in Singapore does not allow this mode of payment to companies. There are a few exceptions, but this statement is true for most companies.

I subscribe to the Cloud service of Starhub. Each month, I received an invoice from them. I asked them to allow me to pay through GIRO, just like the utility bill and even thier consumer bills.

They said that they are not able to accept GIRO payment. It does seem ridiculous as they already have their system to handle consumer bills. Three years have passed.

I did some research around 2010. I found that UK and Australia had reduced their per capital use of cheques by 50% during the previous 10 years. Singapore also adopted the same initiative around the same time. The reduction in cheques was only 20%.

I cannot remember the actual figures, so these numbers are from my memory.

I wrote to the Straits Times about the slow progress in moving away from cheques. They published my letter. Nobody from MAS or the Association of Banks bothered to talk to me.

I also met with a senior manager in MAS to discuss this matter. She said, "Wait. we are rolling out FAST payment".

Sadly, the FAST payment does not address the challenge of getting companies to receive electronic payments. So, we continue to use cheques, in spite of the inefficiency.

As we continue down this road, the cost of doing business continue to be high. Our productivity continues to be very bad. We become more and more uncompetitive.

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