We are well into the digital age and the number of Australians using cash continues to drop. My two sons, both in their 20s, almost never have cash on them. Just about the only time they do is when giving it to me, accompanied by a request to deposit it. For them, it’s all card, or more accurately now, phone. And there are cheques. I’m not even sure if either of my sons would recognise a cheque!
Cheques do still exist, although they’re certainly no longer in common use. Most industries have transitioned away from their usage, and the remainder aim to do so. One such industry, however, has struck a number of hurdles in their attempts to ‘de-cheque’ their operations.
The industry in question is insurance. And when you think about it, that’s understandable in a way, particularly when considering life insurance. Many life insurance payouts will be given to the surviving spouse who, in most cases, will not be young. For the oldest generation of Australians, accepting a large payment by means other than cheque is a challenge.
That in turn presents a challenge for insurers, who are planning to make the transition away from cheques.
Do they really have to transition away from cheques?
There’s an element of irony associated with the answer to this question. You’ve probably read of the federal government questioning the rate at which rural bank branches are closing. That questioning has arisen from concerns about how older Aussies will cope without a local branch.
In the case of the insurance industry and cheques, we have the opposite scenario. The federal government is pushing the transition away from cheques, and it is the insurance industry that believes the time frame may be too aggressive.
However, it is not the government’s time frame that’s concerning insurers. They believe the government’s timetable, to end all cheque usage by 2030, is very reasonable.
It is, in fact, the banks that are presenting the industry with challenges, according to insurers. Responding to a Treasury consultation paper, Winding down Australia’s cheques system, the Insurance Council of Australia (ICA) flagged banks as a stumbling block.
Banks cheque out
In its submission, the ICA outlined a shortened time frame in transitioning away “due to recent announcements by banks regarding changes to cheque services from 2024”. This is a broad reference to a number of Australian banks that have announced the cessation of cheque processing this year.
Macquarie Bank, the Bank of Sydney and Bank Australia have all announced dates in 2024 on which cheque processing will cease.
In theory, such issues can be overcome through simple provision of bank details by customers to insurers. But the ICA says many older Australians are reluctant to do so, especially in light of regular scam warnings.
Acknowledging, the banks’ haste, the ICA said it will be forced to accelerate its own cheque transition timetable. “This has required our members to aim for implementation by 2024 rather than 2026,” it stated in its submission. “Cheque access and services provided by banks may vary during the transition.”
The ICA said banks will have to assume the responsibility of keeping customers informed of their options concerning cheques. “Customers will need to be properly informed by their banks to understand whether cheques will still be accepted,” it stated. “That information will inform customers’ preferred method of receiving payments or decision to open additional accounts to continue to accept cheque payments.”
Plan ahead
Whatever grace period banks offer insurers, the day you will no longer use cheques is fast approaching. Some of you will be unsure of how to best deal with this transition. You would be well advised to discuss this with staff at your local bank branch – if you still have one.
Were you aware that the demise of the cheque is looming? In what ways will this affect you? Let us know via the comments section below.
Also read: Banks blasted over interest rates for savers – and those onerous conditions
Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.