Once a popular payment mode, the cheque may soon see its departure from the banking world, at least as per recent trends. Read on to know why!
While cash is still managing to make its presence felt these days despite digital avenues dominating the world, cheques have clearly taken a beating. As of mid-2018, the number of cheque payments stood at as low as 3% of the total payments made, according to the RBI. With over a 10% decrease in less than a decade, one can’t ignore the possibility of this once popular payment mode slipping into oblivion.
Out with the old and in with the new
As countries across the world adapt to new digital platforms that assure security and convenience, it’s only natural that stalwarts such as the cheque system gracefully depart from the spotlight. Not only do digital payments make transactions easy for customers, but they also cost a lot less for banks!
Experts are also pointing at other alternatives available for loan instalments today as contributors to the fall of the mighty cheque empire. With Electronic Clearance Service and National Automated Clearing House taking over the loan instalment paradigm, cheques lost out on a major chunk of their utility value.
Additional Reading: Cheque-mate? Demystifying Different Types of Cheques
How soon will cheques be considered irrelevant?
Though the trend seems to suggest a short lifespan for the cheque, financial gurus say that it will still linger on for now. The RBI states that India still processes over 90 million cheques a month, which is a sizeable amount, though it is small in comparison to other payment methods.
Additionally, cheques do boast of unique advantages in some situations. The ability to issue post-dated cheques enables the payer to gather enough funds before the said date. Another reason why cheques may stick around for a while is that the older generation still trusts it more than digital payments. This sense of familiarity can make it hard for them to completely abandon a payment system that they’re used to.
Additional Reading: What is a Cancelled Cheque?
It’s all part of evolution
If you think about it, change is the only constant in our world, and if you really want to learn how to stay on top of your game, you’ve got to dance with the change – and that’s what some businesses are doing.
Digital payments are faster, safer, and require less human effort, so it makes sense for businesses to optimise their financial systems with the latest technological tools. In fact, businesses that depend on e-commerce will certainly view futuristic payments as a “one-up” over their competitors.
A look back on the history of cheques
The actual roots of the cheque are said to have originated from early 9th century traders, who would often find it hard to lug around their heavy coin bags. To overcome this hassle, traders invented something called “Sakk” which was a piece of paper which carried payment instructions. This proved to be a safe method as the chance of theft of coins was eliminated.
Fast forward to the 15th century and cheques emerged in Europe-Amsterdam to be precise. Since they were still hand-written back then, cheques could be manipulated. While some places banned their use, some places made it mandatory for both the parties in the transaction to be present at the bank to validate cheques.
As the years passed, cheques spread through America and as we evolved, so did this payment system. Historians credit the year 1659 as a landmark for cheques, as the first documented example of a handwritten cheque dates back to this very year.
The next few hundred years saw cheques rise to prominence, and there was no looking back from there.
Additional Reading: Credit Card Chronicles – A Look Back
Today, cheques seem to have been overshadowed by digital platforms that eliminate the need for physical effort and travel; a welcome change – if you could ever go back and ask that merchant from the 9th century, he’d surely agree, right?
Although we’re all set to say goodbye to this historic payment system, it looks like cheques will be around for a little while longer at least, since it still seems to still serve a diminishing need, however small it may be.
Here’s a quick video that will give you a lowdown on all the important things that you need to know about a cancelled cheque:
Use of Cancelled Cheques
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