Cheat sheet: How to move on from cheques
Cheques are on the way out and organisations need to start planning the transition to cheque alternatives now. Leeanne Gray, Westpac Institutional Banks’s Head of Domestic Payments & Simplification, explains what’s involved.
Cheques have been circulating as a form of payment since the days of ancient Rome, but from late 2029 they will no longer be accepted in Australia.
At their peak in the 1980s, cheques accounted for around 85 per cent of all non-cash payments in Australia and almost all of their value.
By 2022, that figure had fallen dramatically to less than 0.1 per cent of retail payments by volume and just 0.05 per cent by value and, as the volume of cheques declined, the cost per transaction exceeded $5 for every cheque processed.
The phase-out will be in two steps. The deadline for issuing the last cheques is 30 June 2028, while cheques will cease to be accepted from 30 September 2029.
Who is likely to be most impacted by the phasing out of cheques?
Leeanne Gray, the Head of Domestic Payments & Simplification at Westpac Institutional Bank, says certain customer segments and industries will feel the transition from cheques to real-time payments more than others.
“We understand that for some people cheques are simply a familiar part of life, but for others the barriers to making digital payments are much more difficult. Whether that’s a customer who has never used online banking, or a business with complex and embedded processes, we are here to help each individual customer over the next three years.”
We also understand that some businesses continue to issue cheques for ease of payment when they do not have the beneficiaries’ digital payment details, or where cheque issuance processes are mandated in legislation or embedded into their systems and processes, Gray points out.
“Our priority is to make the change as smooth as possible, so we’re starting our campaign to help the transition early and encouraging people to talk with our team about their needs,” she says.
What should businesses do to prepare for the real-time transition?
As the world moves towards real-time digital payments there’s an increasing number of payment options for both individuals and businesses.
Individuals have embraced real-time payments through the New Payments Platform (NPP), and the platform’s share of account-to-account transactions has increased from 5 per cent in 2019 to 35 per cent in 2024.
There are now more than 100 financial institutions offering NPP payments and over 102 million accounts reachable according to latest data from AP+, with people and businesses paying through Osko and through PayID.
These products are already here and are being used by increasing numbers of Australians, so migrating from cheques should not be too disruptive to the financial system overall.
How is Westpac working with business customers on the real-time transition?
The bank is conducting real-time readiness assessments with large corporate and institutional customers and, Gray says, Westpac is helping customers take a “phased” approach to the transition rather than an all-at-once “Big Bang”.
Most businesses are already using digital payments infrastructure to some extent, so it’s about “making sure they have the right systems and processes in place”.
Some areas are key in the transformation for businesses. Securely collecting digital payment information, for instance, is critical.
Organisations and individuals need to start preparing now, Gray urges. “For a smooth and well supported transition and to minimise disruption they need to start taking advantage of the real-time payment capabilities available, commencing a phased transition away from cheques to smooth the risk and cost, and to help their customers through the wind-down of cheques,” she says.
“The change requires organisations to consider how and when they will stop the issuance and acceptance of cheques, design alternative payment and reconciliation processes, upgrade technology and roll out the change to their customers.
“For example, today if you make payments to customers by cheque and you don’t have their bank account or PayID details, you need to start a process of securely collecting that information. This is not something you can facilitate overnight.”
Beyond compliance, are there any advantages in this transition?
The big advantage for business, says Gray, is being able to move to a real-time payment environment that will deliver more cost-effective and efficient payments processing that supports a better customer experience.
“The number one benefit is that you and your beneficiaries receive instant payments that are much more cost-effective to send, receive and reconcile,” she says.
What do you say to organisations who aren’t prepared? How can Westpac help?
“We will support you in reviewing the types of payments you receive or make with cheques, assess the impacts to your customers, processes and technology and your readiness to move to real-time payments,” Gray says.
“We have options for you to make real-time payments and are here to help you make the move.
“QuickStream is our single integration platform that allows you to view your real-time receivable payments in one place, including PayTo, improving visibility, reporting and reconciliation.”
“PaymentsPlus is our payables platform that gives a single access point to every real-time capability that we have.
“We do a high-level impact assessment of where businesses are up to in the journey and then, depending on that, we guide them through the next steps of where they need to go,” explains Gray.
The sooner businesses and organisations embrace and prepare for the change, the sooner they can take advantage of the opportunities in the new payments landscape.
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