Cheques on the way out?

Banking industry group Payments NZ (PNZ) is planning a study of cheques as a payment instrument, as use of cheques continues to decline.

New Zealand has one of the highest uses of electronic transactions in the world. The growth and expansion of this system over many years has seen the use of some traditional payment instruments, such as cheques, decline.

The PNZ Board, which is made up of banking industry representatives and independent board members, will consider a proposal to undertake an initial study, which if approved, will set out to understand how cheques are used in New Zealand. The study will ensure that as cheque usage and acceptance of cheques declines further, the community’s payment needs continue to be met.

PNZ Chief Executive, Steve Nichols, said the first part of the study would be gathering data, and consulting with the public and other stakeholders to understand their views.

The study is expected to begin later this year.

Mr Nichols said that paper (primarily cheque) usage in New Zealand had been declining at an annual average rate of nine per cent over the last eight years.

Cheques interchanged through the financial system have reduced from about nine per cent of total retail transactions across all payments methods in 2003 to two per cent in 2010.

Other countries have recently begun to review the cheque as a payment instrument mechanism, including the United Kingdom, Ireland, Canada and Australia.

“It is time to undertake an orderly review of cheques in this country to determine the best way to manage the decline and ensure our payments system continues to be efficient and meet the needs of users,” Mr Nichols said.

“PNZ is therefore considering a process to seek industry, public and interest group views on the place of cheques in New Zealand, before making any decisions about the future of cheques.”

PNZ was established in October 2010 and has taken over responsibility for the industry Rules and Standards that were previously the domain of the New Zealand Bankers’ Association.