Singapore Joins the Cheque-Out Queue
Singapore recently joined the growing list of countries that have either stopped using cheques or have announced plans to do so.
We’ve watched on with interest as the once-mighty paper cheque (or check) continues its slide towards irrelevance, and documented this in articles like “Is time up for the humble cheque?” and “Australia Joins the Cheque-Out Queue”.
In July this year, the Monetary Authority of Singapore (MAS) announced that all corporate cheques will be eliminated by the end of 2025.
Why make the move?
If you’ve read our other articles on the subject, the reasons provided by MAS will come as no surprise:
- Cheque transaction volumes declined by almost 70% between 2016 and 2022, coinciding with the growing adoption of e-payments.
- Due to the fixed overheads associated with maintaining the cheque clearing systems, the average cost of clearing a cheque quadrupled in that same period.
- This trend is expected to continue, meaning that banks will no longer be able to absorb these costs.
Commencing this month (November 2023), banks will start passing cheque clearing costs on to customers. These charges will ramp up over time, and the impact is likely to be twofold.
As well as helping to insulate banks from the increasing costs, these charges should incentivize remaining cheque users to seek out and take up alternative payment methods.
Interestingly, Singapore has kicked the can down the road a little when it comes to personal cheques, promising further public consultation before announcing a timeline for the final exit. Perhaps they were spooked by the UK experience, where a 2010 exit announcement was quickly followed by a consumer backlash and a humiliating backdown.
Orchid’s EFT Solutions
The paper cheque may survive longer in countries like Canada and the US, but the writing is on the wall. Small and medium-sized businesses have been taking matters into their own hands for years.
The benefits of replacing paper cheques with Electronic Funds Transfer (EFT) are clear, particularly where most payments are business-to-business, or employer-to-employee, and the impediments that gave the UK pause for thought are less of an issue.
EFT Processing, the leading Sage add-on from Orchid Systems, has helped thousands of businesses make this transition.
Fully integrated with Sage Accounts Payable & Accounts Receivable processing, it creates EFT files in the format required by your bank.
800+ bank formats are already supported, with new ones created on request.