SINGAPORE – Corporate cheque usage in Singapore has dropped significantly over the years but getting rid of it entirely is not so straightforward.

Certain businesses will need help to transition away from using cheques and not all customers have access to other payment options aside from cheques.

These issues have come under the spotlight after the Monetary Authority of Singapore (MAS) on July 28 announced that all corporate cheques will be eliminated by end-2025.

The average cost of clearing a cheque was 40 cents in 2021, and is projected to increase to up to $6 by 2025 should cheque volumes continue to drop.

As the increasing costs are becoming unsustainable for banks to continue absorbing, according to MAS and the Association of Banks in Singapore, the seven major banks here – Citibank, DBS Bank, HSBC, Maybank, OCBC Bank, Standard Chartered Bank and UOB – will begin charging corporates and individuals for Singapore dollar-denominated cheques by Nov 1, with the other banks to follow by July 1, 2024.

According to the major banks that The Straits Times contacted, business sectors that still use cheques on a regular basis include property, law and insurance companies, wholesale dealers, brokerages and telcos.

Cheque usage occurs in “select business processes such as property-related transactions, insurance payouts and hospital bill refunds”, said Ms Tesy Mathew, group head of cash product management of DBS’ global transaction services. But she noted that it is “on a downward trend”.

Aside from payment reasons, some use cheques as a touchpoint for relationship-building with clients.

An insurance agent, for example, could check in and show concern when handing over a cheque payout to a client who made a claim for an accident or medical issue.

Mr Marc Leong, head of SME banking at Maybank Singapore, said moving away from cheque usage could potentially be a challenge for small and medium-sized enterprise (SME) owners.

“(They) would be in the more senior age bracket... They have been using cheques as their business payment norm, and never had an urgency to use e-payments,” he added.

Other considerations that may put them off from tapping digital payment methods include having to make changes to their working capital management and bank reconciliation process and ensuring that their customer support and communications comply with the new approach.

To motivate such businesses to switch, banks make digital payment methods the cheaper option or offer fee rebates. The banks also have online platforms with dedicated features for business transactions and expenses.

A Standard Chartered spokesman highlighted the issue of legacy infrastructure which may not easily accommodate digital transactions. Some businesses may need to enhance the security of existing systems and train employees to use the various digital banking and payment options securely and effectively.

There is some urgency in addressing this issue, given the MAS announcement in July, but some businesses still need to consider customers who are dependent on receiving cheques for payouts, or may prefer to use them for payments.

MAS has said individuals can continue to use cheques for a period after 2025.

Mr Hariharan Gangadharan, who worked in the financial services industry before retiring in June, uses PayNow or his debit card for online and in-store purchases which usually amount to less than $200. He prefers to use cheques for amounts larger than $500.

He issues cheques up to 10 times a year for matters such as paying for condominium charges and home repairs.

The 69-year-old said: “For me, cheques (are a payment) option that I would always like to have. The mode of payment should be 100 per cent the choice of the payer and neither the banks nor the regulator should interfere in a manner so as to thrust their ideas on the public.”

Such customer preferences have made it less straightforward for some businesses to go digital, noted Mr Melvyn Low, head of global transaction banking at OCBC.

Certain segments of the population may not have online banking accounts too.

According to an AIA Singapore spokesman, it intends to fully transition away from cheques before end-2025. But it is conscious of how this move might affect their elderly customers who do not have other payout arrangements, such as PayNow, to receive monthly policy benefits.

Cheques currently comprise 15 per cent of its payouts to customers.

“A hard stop on cheques can result in a negative impact on their daily livelihoods, which we will want to avoid,” said the spokesman.

“We want to ensure that the transition away from cheques is a smooth journey for our customers, especially the elderly who may still struggle with technology.”

Help for customers

1. DBS x Infocomm Media Development Authority (IMDA)’s Digital for Life movement

The bank has been ramping up its initiatives since 2022, working with partners in the public sector. These include a two-year partnership with the IMDA to reach out to 100,000 Singaporeans and residents to help them with digital training through some 800 workshops.

The workshops are held at DBS branches, libraries, community clubs and hawker centres. Workshops at branches are held on Saturdays after banking hours, with staff giving guidance on use of digital banking and self-service banking machines.

2. OCBC’s Digital Silvers programme

It focuses on helping those aged 60 and above to learn how to bank and pay digitally for transactions using Fast, PayNow and Giro. The one-on-one programmes on weekends at all the personal banking branches are available in English, Mandarin, Malay, Tamil, Hokkien and Cantonese.

People can sign up up to two months in advance at go.ocbc.com/digitalsilvers

3. Dedicated help at bank branches

UOB: Digital advocates at branches guide customers through its digital banking platforms, including the UOB TMRW app. There are also online guides and videos on, say, registering for personal Internet banking accounts and paying bills.

Standard Chartered: Staff can help to set up online banking access or share information on e-payment options. Help is also available via phone calls.

Maybank: Digital ambassadors help customers use e-payment services, and there are pictorial guides on making digital payments.