Decline of Cheque Payments in Australia: A Comprehensive Analysis

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Presentation
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Table of Contents
Introduction......................................................................................................................................2
Conclusion.......................................................................................................................................5
References........................................................................................................................................6
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Introduction
We have written this report in order to address the issue of decreasing use and popularity of the
cheques in Australia. The report throws light on the reasons as to why the payers have decreased
the use of cheques to make payments unlike in the past when cheques were used extensively to
make payments for personal as well as for the commercial use. The declining usage of cheques
points out at the issues that the consumers might be facing while making payments through a
cheque which has been addressed by us in the report.
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Cheques:
The cheque is a negotiable instrument used for making the payments from the drawer’s account
to the drawer’s account (Allbankingalerts, 2017). The major features of a cheque are:
 The biggest advantage of the cheques is that it allows for the payments to be settlements
quickly through the face to face settlements such as in the case of property settlements and
transactions for the real estate businesses.
 Another feature of the cheques is that a person who has to make the payments can write a
cheque from any time and anywhere.
History
If the history of cheques is taken into consideration in Australia then it can be easily said that the
cheques were the only popular non-cash method of payment in the times around the 1990s.
Cheques payments were made as approximately 50 cheques per person per year in the country of
Australia in those days (Rba, 2019). This number exceeded the number of payments made
through debit and the credit cards by 2 times.
The decline in the usage of cash
Since the innovation in technology, the popularity of non-cash payments has increased in the
country. The non-cash payments include the debit and credit card payments, the popularity of
which increased around the years 1997 and the popularity of the payments through the internet
using the online transactions via computers and now mobile phones have increased after 2010. In
the year 2016, the number of payments made via the debit card was around 200 payments per
capita and the number of payments made via the credit card was around 100 payments per capita.
The major area of concern is that the usage of cheques has declined at a very fast pace in the past
decade. The percentage decline in the usage of cheques was around 20% in the year 2016 which
was the highest decline as compared to any of the past years' decline. The decrease in the usage
of cheques is the most experienced in the category of personal and commercial cheques as the
percentage decline in all the past years in the usage of personal and commercial cheques has
been around 13% (Rba, 2019). However, the usage of the cheques in the category of the
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financial cheques are also declining but declining at a slower rate as compared to the other two
categories of the cheques.
The reasons for the declining use of personal cheques
There is a major decline in the usage of personal cheques as compared to the previous year. The
data and figures indicate that the decline is huge as in the year 2002; the number of personal
cheques written was 8 cheques per person per year which later on declined to 2 cheques written
per person per year in the year 2016(Rba, 2019). In a survey, conducted in the year 2016, on
17000 customers it was concluded that the number of cheques made by them all in the year 2016
was less than 40 cheques. The survey also throws light on some broad points such as that the
cheque payments now are majorly restricted to making a payment for a lump sum amount such
as for a holiday or for major expenditure.
The reasons for the declining use of commercial cheques
The major fall in the cheques payments can be attributed to the increased usage of internet
banking from the side of the businesses. The second major reason for this can be attributed to the
SuperForms imposed by the government on the employers to pay the number of superannuation
funds through the online mediums only. The only usage of cheques that is done is by the real
estate companies or by the government itself for making some big payments. The finance and the
insurance sector in Australia also use the cheques to make payments as they are indulged in
industries which make transactions of large amounts. The government agencies are switching to
making payments through the online mediums now whereas in the past all of the transactions
were carried out via cheques only for the Federal government (Rba, 2019).
View on Future use of cheques
Taking a look at the current usage of the cash and keeping in mind the present decline in the
popularity of cheque payments it can be said that the usage of cheque payments cannot be
improved in the future as well. The reason for this can simply be attributed to the ever-
increasing popularity of the online methods of payments and the debit and the credit cards
payments (Rba, 2019).
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Conclusion
From the above report, this has been concluded by us that the usage of cheques is at an ever-
increasing decline which cannot be stopped given the ease and convenience the online
transactions allow. Also, the cost of using cheques is higher than the cost paid for transacting via
the online medium. Ultimately, this can be concluded that the online medium has outreached the
usage of cheques in the present scenarios, both for the commercial as well as for the personal
cheques.
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References
 Allbankingalerts. 2017. What is a Cheque – Definition, Types of Cheque and Features.
[Online] Allbankingalerts Available at: http://allbankingalerts.com/what-is-cheque-
definition-types-of-cheques-and-features/ [Accessed on: 24th May 2019]
 Paisabazaar. 2019. Cheque Meaning. [Online] Paisabazaar Available at:
https://www.paisabazaar.com/banking/cheque-meaning/ [Accessed on: 24th May 2019]
 Rba. 2017. The Ongoing Decline of the Cheque System. [Online] Rba . Available at:
https://www.rba.gov.au/publications/bulletin/2017/jun/pdf/bu-0617-7-the-ongoing-decline-
of-the-cheque-system.pdf [Accessed on: 24th May 2019]
 Rba. 2019. Payments Data. [Online] Rba Available at: https://www.rba.gov.au/payments-
and-infrastructure/resources/payments-data.html [Accessed on: 24th May 2019]
 Rba. 2019. Payments System. [Online] Rba . Available at: https://www.rba.gov.au/payments-
and-infrastructure/payments-system.html [Accessed on: 24th May 2019]
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