Singapore's banks are raising fees for processing cheques in a move towards a cheque-free future in the country. OCBC is the latest local lender to make this move, charging S$0.75 a cheque from the start of next month.
Currently, OCBC's small-medium enterprise (SME) customers enjoy free cheque processing for the first 30 cheques each month, but this will change next month. A fee of S$0.75 fee per cheque will be charged. This move mirrors that of rival DBS, the first local bank to raise fees for cheques this month.
DBS now charges S$0.75 per cheque, whereas it was free for the first 30 previously. Banks can save millions of dollars if they can successfully persuade businesses to transact digitally due to the high cost of processing cheques. For example, the cost of processing cash and cheques in 2015 amounted to some S$2 billion.
Reducing Reliance On Cheques
While SMEs have increasingly reduced their reliance on cheques and switched to using Singapore's real-time settlement network FAST (Fast and Secure Transfers), more needs to be done, said Melvyn Low, head of global transaction banking at OCBC Bank.
To encourage the move to digital payments, the bank is offering to waive fees for their first 30 FAST transactions and PayNow transactions via FAST each month from Oct 1 until Dec 31. Thereafter, the fee will be S$0.50 for each transaction.
Not As Easy As ABC
«Changing payment methods from traditional to electronic payments is not as simple as adopting the technology - it also requires changes in business practice, redefining workflows, processes and upskilling staff,» said Shirish Jain, payments director at PwC's strategy consulting arm Strategy, who was quoted in «Business Times»(behind paywall).
Moreover, cheques still have a unique proposition in some situations, which includes their being used as guarantees, Jain noted. The chief operating officer of lifestyle brand Benjamin Barker interviewed by the local media, Damien Tan, agrees. «Fraud and unauthorized transactions are a rising concern and I would suggest requiring checks for transactions above a certain amount, say S$500,» Tan said.
