Gold, diamonds, rare spices and even fine tea were all once common forms of currency which were ultimately replaced by more convenient, practical forms of payment. Today, it appears that the humble cheque may be facing the same fate.
We all know it can take days to clear a cheque, often requiring approval from the bank to verify its authenticity. Compared to the ability to transact online business instantaneously, for many it’s simply an inconvenience that they could do without.
Besides this, cheques are costly. Purchasing a chequebook in New Zealand generally costs upwards of 15 dollars, and you’ll be charged at least five dollars for requesting a single cheque at most banks. Cashing a cheque can also come with hidden costs, especially if this takes place overseas.
Ironically, the same comments once made about electronic banking – that it is too complicated – are now the accepted view on cheques.
It’s no surprise then that electronic banking has become the global standard. In fact, some stats suggest it has caused a 70 per cent drop in the use of cheques since the early 1990s, when 2.4 billion were processed annually.
New Zealand is right in line with this trend. A report from Payments NZ showed that 110 million cheques were processed in 2010, down from 206 million back in 2002.
Today, more New Zealand businesses are deciding to stop processing cheques for their business customers, as they are simply inefficient and expensive.
NZ Post recently announced such a move, and more will no doubt follow, especially if the decision of a government review currently underway is to phase out the cheque entirely.
Increasingly, direct debit billing solutions, like the full-service model offered by Debitsuccess, are becoming the standard for a wide range of businesses that collect regular customer payments.
The end of the cheque won’t be a bad thing for business. It will mean businesses can get on with making money, rather than wasting time processing it.