Cheques being phased out in Australia by 2030

[nctnico]

The cardholder's legal protections on credit cards are much better here than for debit cards.

But you pay for this protection one way or another. Upselling products with an insurance is a very lucrative business!

[themadhippy]

One place ive found cash or cheque an advantage is for deposits,from personal experience it can   take the company sevral days to refund your deposit.

[SiliconWizard]

In Australia it appears that some banks and organisations are making it possible to open a bank account with no fixed address. There's also some ways to deal with getting physical mail too. I'm not saying it's super easy, but it's not impossible. Going from what I've read about these services, continuing the use of cheques doesn't appear to be useful for people with no fixed address. A bank account and a debit card (very minimal application process) would seem the way to go. Any government payments can go into the account and be drawn upon using the debit card or by withdrawing cash.

Cheques can be used by people with no fixed abode and no bank account: go and collect them and use a cheque cashing service.

Yes, ultimately it's closely related to the question of cash, which is also on the verge of being obsoloted, maybe not quite as soon as cheques, but close enough.

You're not going to convince people that have already embraced the new paradigm of a 100% connected, 100% dependent on this connection society. They often just see what they have to gain (the useful aspects) while ignoring what they have to lose (until they run into a situation where they'd need an alternative). Just imagine you don't have cash or cheques, what do you do when there's a grid blackout? Maybe it never happens?

The question is not so much about old tech vs new tech, progress (in the true sense) vs conservatism IMHO, but more about how to leverage new tech to continue promoting resilience, adaptability and freedom.
Where we are heading doesn't seem to do much good for either of these three points. It focuses on cost reduction (which still remains to be estimated all expenses considered though), security and control.
Whose security by the way?

[vk4ffab]

I agree about the problems with debit cards in the US, which I consider to be a pipeline directly from my bank account.
They often are granted to people whose credit record is too poor to get a credit card.
The cardholder's legal protections on credit cards are much better here than for debit cards.

My debit card, which is the only outward facing pipeline to my savings, only ever contains a small amount of money. Typically less than$1000, a number I could lose without it being a financial burden. I see a debit card as being the same as carrying cash, a theftable object that someone can use tap and go for $100 purchases up to the daily card limit. Everything else, is in another account that can only be accessed digitally and only i know the account credentials to access it. I have been banking that way now for close on 20 years.

In Australia the major card providers have zero liability protections for card holders, so if there are fraudulent payments made from a stolen debit card, the company wears the cost, not the account holder. The exact same protections as offered on credit cards. So if i was robbed on the street for my wallet, any tap and go transactions processed by visa should be refunded. I have never had to try it out, but in theory that is how it should work.

[TimFox]

Here is a summary of the relevant differences in the US:
https://www.bankrate.com/finance/credit-cards/credit-card-vs-debit-card/#how
From that site:  "Since credit cards offer fraud liability protections that debit cards do not, meaning online purchases with credit come with fewer risks." 
(Their grammar, not mine.)

[CatalinaWOW]

A great many posts in this thread are of the form:  "There is no use case for checks than cannot be performed by another method (usually electronic)" and then concluding that there is no use for checks.

While the alternative method may be difficult for some people for some transactions, I do agree that there is nothing that checks do that cannot be done by other means.  We could even go back to "Letters of Credit".   

But at its root the argument is much like saying there is no tune that cannot be played on a musical instrument other than a piano, and therefore pianos are unnecessary and can be eliminated without losing anything.  And the argument is somewhat true.  There is a rich world of music that does not involve a piano.  Many people have no fondness for a piano.  Pianos are large, expensive and heavy instruments.  And piano usage and ownership has been declining rapidly.   But the argument is intrinsically wrong.  Those who like and use pianos are the ones who should decide whether they should exist and be used, not those who do not use them.

[Halcyon]

A great many posts in this thread are of the form:  "There is no use case for checks than cannot be performed by another method (usually electronic)" and then concluding that there is no use for checks.

While the alternative method may be difficult for some people for some transactions, I do agree that there is nothing that checks do that cannot be done by other means.  We could even go back to "Letters of Credit".   

But at its root the argument is much like saying there is no tune that cannot be played on a musical instrument other than a piano, and therefore pianos are unnecessary and can be eliminated without losing anything.  And the argument is somewhat true.  There is a rich world of music that does not involve a piano.  Many people have no fondness for a piano.  Pianos are large, expensive and heavy instruments.  And piano usage and ownership has been declining rapidly.   But the argument is intrinsically wrong.  Those who like and use pianos are the ones who should decide whether they should exist and be used, not those who do not use them.

I think most people here acknowledge this. However as I (and other) have pointed out before, how long do you go supporting an antiquated and increasingly inefficient system (both in terms of actual utility and associated costs)?

Now, I've never worked in a bank but I can envisage some of the costs involved in producing/processing cheque payments would be as follows:

• Cheque drawing/processing fees
• Costs associated with staff having to perform manual processing (both from the bank's and end-user perspective
• Indirect costs associated with cheque/signature fraud
• Cost of maintaining a physical presence in the community (bank branches)
• Delays associated with slow clearing times (thinking about large projects etc...)

[tggzzz]

A great many posts in this thread are of the form:  "There is no use case for checks than cannot be performed by another method (usually electronic)" and then concluding that there is no use for checks.

While the alternative method may be difficult for some people for some transactions, I do agree that there is nothing that checks do that cannot be done by other means.  We could even go back to "Letters of Credit".   

But at its root the argument is much like saying there is no tune that cannot be played on a musical instrument other than a piano, and therefore pianos are unnecessary and can be eliminated without losing anything.  And the argument is somewhat true.  There is a rich world of music that does not involve a piano.  Many people have no fondness for a piano.  Pianos are large, expensive and heavy instruments.  And piano usage and ownership has been declining rapidly.   But the argument is intrinsically wrong.  Those who like and use pianos are the ones who should decide whether they should exist and be used, not those who do not use them.

I think most people here acknowledge this. However as I (and other) have pointed out before, how long do you go supporting an antiquated and increasingly inefficient system (both in terms of actual utility and associated costs)?

Now, I've never worked in a bank but I can envisage some of the costs involved in producing/processing cheque payments would be as follows:

• Cheque drawing/processing fees
• Costs associated with staff having to perform manual processing (both from the bank's and end-user perspective
• Indirect costs associated with cheque/signature fraud
• Cost of maintaining a physical presence in the community (bank branches)
• Delays associated with slow clearing times (thinking about large projects etc...)

Now, for fairness' sake,  imagine the costs associated with other payment mechanisms.

Start by understanding the number of companies involved in, say, every credit card transaction. When I first glimpsed that my eyes widened and I resolved that I really really never ever wanted to have to understand that!

I did get to see a little of the reconciliations business, i.e. how one company matches the monies received/sent to the statements of account received/sent. It ain't pretty, and it is unusual that all statements are fully reconciled. What happens is that each bank has a large number of rules to the effect "discrepancy too small; can't be bothered to investigate".

As for working in a bank, my understanding are that many of the processes are to protect banks and to a lesser extent their customers from internal fraud by their staff. When that goes wrong the results are very unpleasant, e.g. Halifax-vs-Munden where a policeman was falsely jailed for "phantom ATM withdrawal" fraud, or Barings bank.

[Halcyon]

As a bit of a side note, I just got an email from my bank this morning. From 20/05/2024, they will no longer accept deposits in the form of cheque or cash, with cheques to be completely phased out by November 2024.

Cash withdrawals from an ATM will still be possible.

https://www.macquarie.com.au/help/general/cheque-and-cash-changes.html

[tggzzz]

As a bit of a side note, I just got an email from my bank this morning. From 20/05/2024, they will no longer accept deposits in the form of cheque or cash, with cheques to be completely phased out by November 2024.

Cash withdrawals from an ATM will still be possible.

https://www.macquarie.com.au/help/general/cheque-and-cash-changes.html

So you take out cash and pay a merchant, who presumably cannot pay cash into their account?!

In a cashless environment, what happens when your card is lost or swallowed by an ATM, or a North Korean (et c, etc, etc) gang cripples the bank? Or, for that matter, when the bank cripples itself?

[Halcyon]

As a bit of a side note, I just got an email from my bank this morning. From 20/05/2024, they will no longer accept deposits in the form of cheque or cash, with cheques to be completely phased out by November 2024.

Cash withdrawals from an ATM will still be possible.

https://www.macquarie.com.au/help/general/cheque-and-cash-changes.html

So you take out cash and pay a merchant, who presumably cannot pay cash into their account?!

Business accounts will still retain the ability to deposit cash since most stores still accept cash.

[tggzzz]

As a bit of a side note, I just got an email from my bank this morning. From 20/05/2024, they will no longer accept deposits in the form of cheque or cash, with cheques to be completely phased out by November 2024.

Cash withdrawals from an ATM will still be possible.

https://www.macquarie.com.au/help/general/cheque-and-cash-changes.html

So you take out cash and pay a merchant, who presumably cannot pay cash into their account?!

Business accounts will still retain the ability to deposit cash since most stores still accept cash.

What happens if I sell treasures at a hamfest, and wish to deposit cash?

What happens when bank attacked or attacks itself or card swallowed (q.v.)? All those have happened and will happen again.

[Halcyon]

What happens when bank attacked or attacks itself or card swallowed (q.v.)? All those have happened and will happen again.

I'll take that gamble. You can't exactly compare banks in parts of Asia to here.

For starters, every deposit holder in Australia is backed by the Australian Government Financial Claims Scheme, which is designed to protect up to $250k per account holder, per bank should the bank fail. That amount is guaranteed by the Government without any additional insurance or need to opt-in.

[magic]

Cash is protected without limitations from bank failures, though arguably other dangers exist.

This would be my last day at this bank.

[Halcyon]

Cash is protected without limitations from bank failures, though arguably other dangers exist.

This would be my last day at this bank.

I actually just switched to this bank recently because of their products, but I suggest that you and I have very different ways of banking. That being said, Macquarie is Australia's 5th largest bank. From what I can see, the other big banks are following suit. Once that happens, the smaller banks will follow.

Australia is moving ever closer to a cashless economy and whilst I don't see it disappearing entirely anytime soon (like cheques), consumers are voting with their wallets and the use of cash is dwindling. As has been mentioned previously, some stores no longer accept cash anymore.

[nctnico]

As a bit of a side note, I just got an email from my bank this morning. From 20/05/2024, they will no longer accept deposits in the form of cheque or cash, with cheques to be completely phased out by November 2024.

Cash withdrawals from an ATM will still be possible.

https://www.macquarie.com.au/help/general/cheque-and-cash-changes.html

So you take out cash and pay a merchant, who presumably cannot pay cash into their account?!

Business accounts will still retain the ability to deposit cash since most stores still accept cash.

What happens if I sell treasures at a hamfest, and wish to deposit cash?

Why would you accept cash? Every now and then I buy & sell second hand stuff. Items over (ballpark) 100 euro get paid by bank transfer. Over here it is rare for people using cash nowadays for these kind of transactions. Keep in mind cash can be counterfeited, a bank transfer where you check the balance on your own phone in realtime doesn't have that problem.

What happens when bank attacked or attacks itself or card swallowed (q.v.)? All those have happened and will happen again.

Having accounts at multiple banks works well. I have 3 working cards in my wallet. And it is good to have some cash on hand in case electronic payments are down for a day.

[SeanB]

Good reason to accept cash is that you have a chokepoint on card transactions, the processor that handles the transaction from the store, and routes it to the bank. They outsource all the IT, and it is only a single keystroke mistake away from having a RBS month, where customers were completely unable to use cards, people were losing houses to foreclosure because debits did not go off, and people could not buy food, electricity or gas, plus were not being paid, as the money went from the sender account, but vanished into nothing. All because somebody in a outsourced data centre, with only a sheet of instructions to follow, not even at any way computer literate, or fluent in English, mixed up 2 steps in the process of completing a day transaction batch, and overwrote the entire database by attempting to restore from an empty backup. Took a good few months to get them more or less running again, and cost them a good chunk of the customer base as well.

Choke point, in that all banks use the same 2 processors, Visa and Mastercard, represented by me by SASWITCH, and a failure at one will cascade through to the other rapidly, leaving no cards working, and even affecting ATM operations, as they also use the same switching networks to allow other bank use, and this comes before the own bank mainframe (or emulation) is able to process the transactions, and a lot of the internal bank systems are also linked this way. Very common to have 10-20 minute outages on the networks at times, but not noticed by customers much, as you are not using them 24/7, but only for a minute at a time. You just see it as a error, and the store tries again, perhaps after a minute, and you are at the edge of the window.

By me 45% of the population is on welfare, with 7% as active taxpayers. So 45% use a card, and have little issue with it to get grant payments, and the vast majority are older women, and single parent households bringing up children, plus a lot of child headed households. Card gets used once a month to draw cash and buy food, and the banking system had been forced to totally block any direct debit ability from those cards, aside from a few select providers who have that in limited form, because of loan sharks that entered direct debits against multiple cards, and emptied them on grant day.

[tggzzz]

What happens when bank attacked or attacks itself or card swallowed (q.v.)? All those have happened and will happen again.

I'll take that gamble. You can't exactly compare banks in parts of Asia to here.

For starters, every deposit holder in Australia is backed by the Australian Government Financial Claims Scheme, which is designed to protect up to $250k per account holder, per bank should the bank fail. That amount is guaranteed by the Government without any additional insurance or need to opt-in.

That scheme is completely irrelevant to the point; nobody is talking about a bank failing. (Having said that, some of the points below indicate that technologies could cause a bank to fail.)

What I'm thinking of is, for example, where a bank upgrades its IT systems in a grossly incompetent way such that customers are unable to access their accounts for weeks. That's happened  several times, and is increasing, to the extent that the UK Government has become involved (my emphasis) particularly paragraphs 17-24...

After a number of significant IT failures, such as that experienced by TSB in 2018, this
inquiry provided an opportunity to look ‘under the bonnet’ of the financial services
sector to ask why IT failures were happening, and how the industry and the Regulators
could have prevented such incidents.

Bank branches are disappearing from our high streets and local communities, and
cash machines are being withdrawn. Customers are increasingly being expected to
use digital services, and yet these services are being significantly disrupted due to IT
failures. Consumers suffer from harm when these IT failures occur. They have been
left without access to their vital financial services and have been left unable to make
payments or withdraw cash. Small businesses have been left without the basic banking
services necessary to run their businesses.

...

17.    IT failures, or incidents (used interchangeably), within the financial services sector
appear to be becoming more common. Over the past 18 months there have been major
incidents at TSB and Visa, along with a litany of incidents at other firms. This increasing
trend is recognised by the FCA, which stated in 2018 that “outages in the financial services
sector are becoming more frequent and publicised” and that “the number of incidents
reported to the FCA has increased by 187 per cent in the past year”.17 Furthermore, the
Regulators reported that 65 per cent of the incidents notified to it in 2018 were from the
retail banking sector, including payment services firms, over five times the next highest
sector, wholesale financial markets.

...
I have not been able to access my account for two weeks now. I have fluctuating
balances, no idea which direct debits and standing orders have been paid, and
my data has been compromised. [ ... ] I have been unable to use my debit card
for purchases as, for a week, my balance was zero. This meant I was unable to
withdraw cash."

"She told me how she sent five emails without response, she spent five hours on
the phone to you at 30p per minute [ ... ] She relies on pension credit. Her
account is now in debit. She said, “I am at my wit’s end, no electricity or gas,
running on emergency, which is about to be cut off. Help please”."

"Unfortunately, after nearly two weeks, we will not be able to submit our formal
mortgage application as the lender—thankfully not TSB—has requested three
months of bank statements. We are still unable to download our bank statements
[ ... ] “We are now faced with the possibility we could miss out on buying the
house our family needs”."


House of Commons, Treasury Committee: IT failures in the Financial Services Sector
https://publications.parliament.uk/pa/cm201919/cmselect/cmtreasy/224/224.pdf

[Halcyon]

I'm not suggesting technology never fails, but perhaps the UK banks need to better oversight, particularly when it comes to their IT systems.

I've used debit cards since I was 14 years old and I can remember two occurrences where a payment failed because of a technical issue.
One happened about 15 years ago when there was some kind of widespread outage, since then, payment terminals have been updated and cards have changes, which means the way transactions are handled between then and now have changed.

The second occurred about 5 years ago, as the store relied solely on 4G/5G and didn't have a WiFi or Ethernet backup to their card terminal. It just so happened at the time I made the purchase, the connection to the cellular network dropped and caused the payment, which was mid-transaction, to fail. I tried again a moment later and everything was fine.

That's my personal experience over many years and probably 25k transactions later and relying on one single bank, and one single card/account.

Many people have multiple accounts. It might be debit card account and a seperate credit card. Those accounts don't have to be with the same bank or even the same merchant. But even with the same card, you have a choice of "networks". For example, if I tap my card, the payment is routed via Mastercard's network. If I insert the same card and press "savings", the payment is routed via the EFTPOS network. That's redundancy in one single card in and of itself. Either way, the money comes out of the same place and costs me nothing.

Also, in case of entire network failure, most payment terminals now fall back to an offline mode so that payments (meeting certain criteria) can proceed.

If I'm at home and wanting to pay bills online, I have at least 3 different ways of doing it, all from the one bank account.

Whilst no system is perfect, I've lost more cash by it simply falling out of my pocket, than I have in the value of digital payments failing in my lifetime. My entire point is, even if you took cheque and cash away from consumers (in Australia), there are various other methods available to make payments, pay bills, buy groceries etc... Sure, some people will need to make adjustments, but it's not onerous or impossible.

During this entire thread I'm also speaking from our point of view down here. I completely understand that our approach here probably won't work in a lot of countries because of various reasons. No one ever suggested that "Because Australia and New Zealand are moving to digital banking, so should everyone else". At the end of the day, technology, no matter what it is continues to evolve. If people choose not to embrace it, then they get left behind.

As I've also said, consumer spending habits usually dictate these things and the vast majority of the population have embraced digital-only payment methods and that number is only increasing. The number of customers using cheques is down in the noise and cash really isn't all that far behind.

[tggzzz]

I'm not suggesting technology never fails, but perhaps the UK banks need to better oversight, particularly when it comes to their IT systems.

... But you don't include such failures in your belief that cheques are unnecessary and desirable.

Here's today's example https://www.theregister.com/2023/10/17/barclays_outage/ Getting a person to answer the phone is very difficult in normal circumstances, and impossible during widespread failures. After all, telephone banking is too expensive when most people use cards. Isn't it?

Saying "need better oversight" presumes that more management could improve the issue. I don't believe that, since people are people and the systems are enormously complicated conglomeration of individual systems.

Many people have multiple accounts. It might be debit card account and a seperate credit card. ...
If I'm at home and wanting to pay bills online, I have at least 3 different ways of doing it, all from the one bank account.

So you are now presuming that people that have difficulty getting one account should get several accounts! Ridiculous and impractical.

In the worse IT failures people have lost all electronic/telephone access to their accounts. At least cheques could be accepted and presented in the future.

Whilst no system is perfect, I've lost more cash by it simply falling out of my pocket, than I have in the value of digital payments failing in my lifetime. My entire point is, even if you took cheque and cash away from consumers (in Australia), there are various other methods available to make payments, pay bills, buy groceries etc... Sure, some people will need to make adjustments, but it's not onerous or impossible.

While systems are working, that is fine for many people. Even during those happy daze (sic) it fails for many.

I'm glad you aren't in charge of ATC, since you would think that ATC controllers would never need to revert to paper strips (containing flight details) thrown across the room from one controller to another.

Yes, access to your own money can be as life critical as ATC.

As I've also said, consumer spending habits usually dictate these things and the vast majority of the population have embraced digital-only payment methods and that number is only increasing. The number of customers using cheques is down in the noise and cash really isn't all that far behind.

And I have said that I rarely use cheques. Nonetheless, they are useful sometimes. The cost justification for stopping them doesn't stand up to scrutiny.

[TimFox]

As a bit of a side note, I just got an email from my bank this morning. From 20/05/2024, they will no longer accept deposits in the form of cheque or cash, with cheques to be completely phased out by November 2024.

Cash withdrawals from an ATM will still be possible.

https://www.macquarie.com.au/help/general/cheque-and-cash-changes.html

Was there a strong demand from this bank's customers for the bank to stop accepting cash?

[tggzzz]

As a bit of a side note, I just got an email from my bank this morning. From 20/05/2024, they will no longer accept deposits in the form of cheque or cash, with cheques to be completely phased out by November 2024.

Cash withdrawals from an ATM will still be possible.

https://www.macquarie.com.au/help/general/cheque-and-cash-changes.html

Was there a strong demand from this bank's customers for the bank to stop accepting cash?

Touché !

Skewers the concept that these service reductions are because customers want reduced service

[TimFox]

How do Australian strippers handle their cash tips?

[coppice]

As a bit of a side note, I just got an email from my bank this morning. From 20/05/2024, they will no longer accept deposits in the form of cheque or cash, with cheques to be completely phased out by November 2024.

Cash withdrawals from an ATM will still be possible.

https://www.macquarie.com.au/help/general/cheque-and-cash-changes.html

Was there a strong demand from this bank's customers for the bank to stop accepting cash?

Touché !

Skewers the concept that these service reductions are because customers want reduced service

I don't think anyone claims customers don't want these services. The claim is they don't actually use them enough to continue providing them. Its like the complaints about small high street bank branches closing. They don't exactly look busy in the run up to closure.

[TimFox]

My large bank (Bank of America) in the US has implemented ATMs all over its territory, both in branch banks (to reduce their labor force) and in free-standing locations.
They can accept deposits in cash (no coins), as well as dispense cash (in certain denominations).
It can't be that difficult, algorithmically, to count domestic currency automatically, as evidenced by this capability.
Their ATMs also allow deposit of checks, without complaint.
Cash deposits are available immediately, checks require a reasonable clearing time.