Globally, the use of cheques is consistently declining as financial institutions and most of their customers increasingly adopt technologically advanced payment alternatives that are far more convenient and cheaper.
Kenneth Matlhole at FNB Business says 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.”
Matlhole says South Africa’s migration away from cheques has mainly been driven by customers embracing the convenience of emerging technology. However, he says, there is a role for financial institutions to educate customers about alternative payment methods and their added benefits.
He points out the following 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 businesses and individuals with eBucks Rewards for adopting a certain 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 South Africa is not immune, whereas digital platforms are equipped to help clients mitigate fraud at a click of a button.
“In this regard, we have innovations like Smart inContact, which allows you to safely approve Online Banking transactions on the FNB Banking App, verify devices that login to your profile, and use secure messaging to immediately report any fraudulent transactions 24/7,” adds Matlhole.
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), Real Time Clearance, and Card payments enable flow of funds to be done much quicker, and with little to no reliance in 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,” concludes Matlhole.