Will cheques really finish by 2030, Treasurer?
It's as official as it can get: the Treasurer sets end date for cheques, but even the Treasurer can't be sure that will really be the end.THE federal Treasurer’s media release launching his strategic plan for a major overhaul of Australia’s payments system starts off by saying cheques are going to be out by 2030, but cash is safe beyond 2030.
What’s the plan?
The strategic plan for this payments system overhaul does not give cheques a lot of attention. That’s because the overhaul is not so much about cheques as it is about upgrading the digital systems needed to accommodate the requirements of the majority of payment system users, business and overseas payments. It is also more about protection against cybercrime.
To many older Australians cheques are important for a variety of reasons.
The Treasurer has promised a consultation paper about cheque use by the end of this year. But the consultation will be about how, not if, cheques will cease to be used in Australia.
The main cause of the shift away from cheques is that the majority of Australian bank account holders regard digital payments as quicker and more convenient. Over time the proportion of people who don’t use cheques will grow, which means that the proportion of cheque users will dwindle even further.
However, banks that still offer and service cheque accounts outnumber banks that don’t. Customers who use cheques still have enough market power to see to that.
What actions will the Government take?
We’re used to cheques being neatly printed slips of paper in a chequebook. But that’s just how it’s developed.
The Cheques Act 1986 says a cheque is an unconditional order in writing addressed to a financial institution signed by the person giving the order, requiring the financial institution to pay someone a sum of money.
So, any piece of paper, a napkin even, can be a cheque as long it orders a bank to pay someone on your behalf, and as long as you sign it.
It’s very hard to ban pieces of paper or napkins, so for the Treasurer to nominate 2030 as the year in which cheques will have been phased out is perhaps an expression of wishful thinking. CPSA doubts that the end of cheques is something that can be legislated.
While cheques are defined and regulated in the Cheques Act 1986, cancelling that Act would not necessarily be the end of cheque use. Cheques are also governed at common law. As long as you keep writing them, they exist. They might bounce after 2030, but they would still exist!
Government actions to phase out cheques will necessarily be minimal. It will not be targeted at retail customers but at legislation that makes payment by cheque mandatory. This is legislation that stipulates how a payment should be made in particular instances. Much of this legislation has already been amended, but a few provisions here and there remain.
The use of cheques by government agencies, such as the Australian Tax Office, will also be actively further reduced.
Realistically, there is little the Government can do to ban cheques. It can stop using cheques itself and abolish mandatory cheque use, and it has done that to a large extent. The rest is up to the marketplace, that is, cheque users, banks and businesses.
How will cheque use wind down?
Many cheque users will regard the Treasurer’s announcement on cheques as bad news. But the win here is that even the Treasurer expects them to be around for another seven years! That’s a long time.
While many banks that currently offer cheque accounts will probably continue to do so until 2030, cheque users are likely to find that acceptance of cheques by businesses will decline further. At a certain point, you may still have a cheque account and a cheque book but no or few opportunities to use it.
Increasingly, banks and almost certainly all new banks will not offer cheque accounts anymore.
What will happen to cash?
The Treasurer has also made it clear that cash will continue to be important to people and particularly small businesses well beyond 2030. That is good news for people who thought cash was about to be completely replaced with cards and online money transfers.
Not going to happen.
THE federal Treasurer’s media release launching his strategic plan for a major overhaul of Australia’s payments system starts off by saying cheques are going to be out by 2030, but cash is safe beyond 2030.
What’s the plan?
The strategic plan for this payments system overhaul does not give cheques a lot of attention. That’s because the overhaul is not so much about cheques as it is about upgrading the digital systems needed to accommodate the requirements of the majority of payment system users, business and overseas payments. It is also more about protection against cybercrime.
To many older Australians cheques are important for a variety of reasons.
The Treasurer has promised a consultation paper about cheque use by the end of this year. But the consultation will be about how, not if, cheques will cease to be used in Australia.
The main cause of the shift away from cheques is that the majority of Australian bank account holders regard digital payments as quicker and more convenient. Over time the proportion of people who don’t use cheques will grow, which means that the proportion of cheque users will dwindle even further.
However, banks that still offer and service cheque accounts outnumber banks that don’t. Customers who use cheques still have enough market power to see to that.
What actions will the Government take?
We’re used to cheques being neatly printed slips of paper in a chequebook. But that’s just how it’s developed.
The Cheques Act 1986 says a cheque is an unconditional order in writing addressed to a financial institution signed by the person giving the order, requiring the financial institution to pay someone a sum of money.
So, any piece of paper, a napkin even, can be a cheque as long it orders a bank to pay someone on your behalf, and as long as you sign it.
It’s very hard to ban pieces of paper or napkins, so for the Treasurer to nominate 2030 as the year in which cheques will have been phased out is perhaps an expression of wishful thinking. CPSA doubts that the end of cheques is something that can be legislated.
While cheques are defined and regulated in the Cheques Act 1986, cancelling that Act would not necessarily be the end of cheque use. Cheques are also governed at common law. As long as you keep writing them, they exist. They might bounce after 2030, but they would still exist!
Government actions to phase out cheques will necessarily be minimal. It will not be targeted at retail customers but at legislation that makes payment by cheque mandatory. This is legislation that stipulates how a payment should be made in particular instances. Much of this legislation has already been amended, but a few provisions here and there remain.
The use of cheques by government agencies, such as the Australian Tax Office, will also be actively further reduced.
Realistically, there is little the Government can do to ban cheques. It can stop using cheques itself and abolish mandatory cheque use, and it has done that to a large extent. The rest is up to the marketplace, that is, cheque users, banks and businesses.
How will cheque use wind down?
Many cheque users will regard the Treasurer’s announcement on cheques as bad news. But the win here is that even the Treasurer expects them to be around for another seven years! That’s a long time.
While many banks that currently offer cheque accounts will probably continue to do so until 2030, cheque users are likely to find that acceptance of cheques by businesses will decline further. At a certain point, you may still have a cheque account and a cheque book but no or few opportunities to use it.
Increasingly, banks and almost certainly all new banks will not offer cheque accounts anymore.
What will happen to cash?
The Treasurer has also made it clear that cash will continue to be important to people and particularly small businesses well beyond 2030. That is good news for people who thought cash was about to be completely replaced with cards and online money transfers.
Not going to happen.
