Published on Feb 29, 2016

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Bill payment by cheque continues its steep decline as Australian businesses adopt more reliable and efficient payment methods according to the Reserve Bank of Australia (RBA).

In his Payments Innovation 2016 Conference presentation, RBA Head of Payments Policy Division Tony Richards presented trend analysis which showed cheque usage had declined by 88 per cent between 1995 and 2015.

In real terms the average number of cheques written each year has decreased from 50 to just six per capita in the past 30 years.

Mr Richards said the decline was accelerating in Australia more so than in other countries.

“The decline in cheque usage is a global phenomenon…but the decline in cheque usage in Australia is a bit larger than the overall decline for OECD economies [and] our cheque usage is now quite low compared with most other English-speaking economies,” Mr Richards said.

Reasons for Australia’s rejection of cheque payment can be credited to two main factorCheque pleases: cost and reliability.

Cheques are significantly more expensive to raise and process than other payment methods, as shown in the graph to the left.

From a reliability perspective, businesses know immediately if an electronic payment has bounced or been received. The same is not the case with cheques, which take time to clear and make effective cashflow management difficult.

Although cheque popularity was declining, Mr Richards said it might be some time before Australia followed suit with the Netherlands and closed down its cheque system entirely.

“With the establishment of the Australian Payments Council in 2014, the industry is again starting to focus on the future of the cheque system,” Mr Richards said.

“[It is] the industry’s expectation that cheques should be phased out at some point, but only when it is clear that the needs of current cheque users can be met by other payment methods.

“More broadly, as the industry starts to think about options for the cheque system, it will be important to make sure that those parts of the community that still use cheques are fully consulted so that we can be sure that their payment needs are met by other instruments.”

Does your business still use cheques, or would you like to see them phased out? Let us know in the comments.