Reserve Bank is putting paid to cheques

Article published 24 February 2023

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A CPSA member from Bathurst rang to lament the disappearance of regional bank branches, ATMs and… cheques. He pointed out that for many seniors life is getting very difficult.

Can’t get cash because there’s no physical bank in town.

The ATM, if you can find one, charges a monstrous fee to take out your own money.

Can’t send a cheque because they’re on the way out, too.

If you’re not online, what do you do?

If you are but internet or mobile coverage where you live is unreliable, what do you do?

And if you’re online but don’t trust doing your banking online, what do you do?

CPSA has advocated for face-to-face banking to be kept going for as long as there is a demand without alternatives for everyone.

We will do so again as part of an upcoming inquiry by the Senate’s Rural and Regional Affairs and Transport References Committee.

So, let’s talk about cheques here.

As everyone knows, fewer and fewer cheques are being written. Twenty years ago, 46 million cheques were written each month. Last December, that number was a measly 1.8 million cheques.

At its February 2023 meeting, the Reserve Bank’s Payments System Board “discussed the high cost of maintaining the cheque system and the increased availability of alternative payment options”.

This is something the Payments System Board does every time it meets.

The media release added: “The Bank will continue to work with financial institutions and the government to support the further transition away from cheques”.

And that “transition away” is gathering pace.

Recently, the Commonwealth Bank wrote to its business customers, advising them of plans to start limiting access to cheques. For any business accounts opened after 3 June 2023, cheque accounts will not be available, and for existing cheque accounts replacement cheque books will no longer be issued automatically.

Personal cheque accounts are not (yet) being targeted by the Commonwealth Bank.

The same can’t be said for Citi Bank Australia and the Australian Mutual Bank, which stopped issuing cheque books last April.

A year ago, National Australia Bank stopped processing cheques drawn on credit union accounts.

AMP Bank stopped issuing cheques in 2021.

Obviously, the new online banks, like Judo Bank, don’t issue cheque books.

Something weird is going on, though.

Because although the use of cheques has fallen dramatically, the number of personal cheque accounts has risen just as dramatically from almost 5 million in January 2002 to 10 million in December 2022.

The majority of those accounts would be dormant, because the number of personal cheque accounts vastly outnumbers the number of cheques written in a year.

Still, people are opening cheque accounts as if they’re going out of fashion, which they are if you look at the number of cheques written.

There are several possible explanations.

One explanation is that people thought it would be a good idea to have a cheque account as a way of making payments for purchases ordered over the phone during COVID, but then they didn’t use their cheque account.

The problem with that explanation is that the number of cheque accounts did not explode in 2020 or 2021, when the pandemic hit. It had been going up steadily for twenty years.

A more plausible explanation is that new cheque accounts are included when new bank accounts are opened. Many account holders don’t even realise they are the proud holder of a cheque account.

So, any campaign to save cheques is not going to be helped by pointing to the steady increase in the number of cheque accounts.

However, the disappearance of bank branches, ATMs and cheques is proving difficult for many people living in regional Australia.

A solution must be found.

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