Letters to Editor
Published Date: 21 August 2023

Response to two letters on elimination of cheques – The Straits Times, 11 and 15 August 2023

We thank Mr Paul Chan Poh Hoi and Mr Hariharan Gangadharan for their letters (“Don’t penalise bank customers for cheques”, 11 August 2023 and “Banks should work towards cutting cost of clearance system”, 15 August 2023). Mr Chan and Mr Gangadharan have raised concerns regarding banks charging a fee to process cheques from 1 November 2023.

2   Banks generally have not been charging customers the cost of clearing cheques. However, this is no longer tenable with the rising cost of cheque clearing on the back of a sharp decline in the volume of cheques in recent years. Cheque volumes have fallen by almost 70% between 2016 and 2022, as payment users shifted significantly towards digital payment channels. This shift away from cheques to digital payments will continue as more financial institutions and businesses offer secure and simple payment solutions to their customers through PayNow and eGIRO. By 2025, larger retail banks will also enable their customers to make deferred payments digitally. 

3   Cheque clearing expenses comprise variable costs of issuing and clearing cheques, and fixed costs to run the central cheque clearing infrastructure. With falling cheque usage, the fixed costs are distributed among fewer cheque transactions. Each cheque becomes more costly for banks to clear, and cheque clearing will increasingly be an inefficient use of industry capital and resources over time.

4   Charging for cheque usage that more accurately reflects processing costs enables customers to make informed choices as to how they transfer funds. Cheque users have the option of transitioning to cheaper and more efficient means of fund transfers like FAST and Inter-bank GIRO, as the industry prepares to retire the cheque truncation system in the future.

5   We recognise that some businesses and customers may have difficulties and challenges in moving away from cheque usage. The Monetary Authority of Singapore is working with the banking industry to develop solutions for customers who are unable to adopt alternative payment methods. The proposals for these solutions and the timeline for the termination of the cheque truncation system will be published in a consultation paper next year.

Dawn Chew
Director (Corporate Communications)
Monetary Authority of Singapore