Guest Contributor | Jan 17, 2023 | 0
Why you need to pay attention to the global decline in cheque usage
By Johan van der Westhuizen
FNB Executive Officer: Business.
Globally, the use of cheque is consistently declining as financial institutions and most of their customers increasingly adopt technologically advanced payment alternatives that are far more convenient and cheaper.
In simple terms, cheques convey a written instruction to your bank to pay money from or into your bank account, and due to manual functionality in this process, there are substantial disadvantages that go with this option.
Over the years, the growing usage of electronic payment methods, high expenses, inefficient processes and vulnerability to fraud have been key contributors to the global decline in cheques usage. In addition, cheques do not offer users the convenience and relative security provided by digital payment solutions.
Namibia’s migration away from cheques has mainly been driven by customers embracing the convenience of emerging technology. However, there is a role for all financial institutions to educate customers about alternative payment methods and their added benefits.
Benefits for using alternative payment methods:
Digital migration – the global community is rapidly going digital, which means acceptance of digital payments is on the increase – customers and businesses are demanding instant and seamless integrated user-experience.
Value-added incentives – financial service providers are increasingly incentivising customers for embracing digital platforms. For instance, FNB rewards individuals with Cash Back paid directly into their linked savings pocket for adopting certain digital banking behaviour.
Save on fees – cheques still carry a higher expense for both the customer and their bank compared to digital payments which can be processed at a fraction of the cost.
Improved safety – Cheque fraud is a global phenomenon and Namibia is not immune, whereas digital platforms are equipped to help clients mitigate fraud at a click of a button.
Convenience – as written instruction to your bank to pay money from or into your bank account, the process in which funds move between banks is extended over several days, typically 7 days. Digital payments, which include Electronic Funds Transfer (EFT) and Card payments enable flow of funds to be done much quicker, and with little to no reliance on visiting the nearest branch.
The universal shift towards digital payments is rapidly emerging across societies and in markets such as the United Kingdom, we’ve seen dedicated working groups tasked with fact-finding around the future of cheques vs digital payments. We are also on the same mission to understand our customers’ needs and how we can help in adopting alternate payment methods.