90 Percent Less Cheques in 10 Years: Australia Begins Consultation on Phasing Out Paper-Based Payments

A National Australia Bank cheque is seen in Melbourne, Australia, on Sept. 7, 2012. (AAP Image/Julian Smith)

The Australian government has launched a public consultation on the removal of cheques from the country’s payment system.

This comes following an announcement in July that outlined the government’s plan to abolish the paper-based payment system by 2030, with the government completely moving to new forms of payment by the end of 2028.

The move was part of a strategic plan to modernise Australia’s payment system with digital products.

According to the consultation paper (pdf), the sharp decline in the use of cheques made it necessary for the government to remove them.

“There has been an almost 90 percent decline in the use of cheques in the past ten years, as people and businesses have swapped to more convenient and faster ways to make payments,” the paper said.

“As cheque use declines, the cost of processing a cheque will continue to increase.”

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Via the consultation, the federal government hopes to receive the necessary feedback to implement a smooth and orderly transition to alternative forms of payment.

To achieve this goal, the federal government will focus on four workstreams, including reducing cheque usage among government departments and agencies, supporting the adoption of alternatives to cheque products among industries, changing legislation that entrenches the use and acceptance of cheques, and working with state governments to implement a coordinated approach to the transition.

Government’s Roadmap to Phasing Out Cheques

The government has proposed dividing the transition into five stages.

In the first stage, banks and financial institutions will stop issuing cheques to customers by 2025, followed by an end to the issuance of commercial and government cheques by 2026.

In the third stage, the government will stop individuals from issuing cheques by 2027 before ceasing the acceptance of personal, commercial, and government cheques by the end of 2028.

Finally, the government will ban individuals and organisations from accepting bank cheques and close the cheque system by the end of 2030.

Meanwhile, the government also identified six conditions required for a smooth transition, including providing sufficient grace periods for consumers and businesses to adjust, providing education and support for cheque users, and offering appropriate alternatives.

According to government data, cheque payments made up just 0.05 percent of the value of all retail payments in Australia in the 2022-2023 financial year.

This figure revealed the dramatic decline of cheques as a payment system, considering that cheque use accounted for approximately 85 percent of all non-cash payments at its peak in the 1980s.

In the past decade, cheque transactions dropped sharply as people moved to online banking and other digital payment methods (from just under 200 million transactions in 2013 to 27 million in 2022).

The consultation is open to the public until Feb. 2, 2024.

ATM machines are seen outside a branch of the Commonwealth Bank in Melbourne, Australia, on Aug. 8, 2018. (William West/AFP via Getty Images)

Macquarie Bank to Ban Cash and Cheque Services

As the federal government moves to modernise its banking system, commercial banks across the country are already ahead of the curve.

In September, Macquarie Bank–Australia’s fifth-largest and predominantly commercial bank–informed its customers it would phase out cash and cheque services across all of its banking and wealth management products, including super and pension accounts, between January and November 2024.

The bank will also cease allowing cash withdrawals and deposits at its branches with the National Australia Bank.

According to the bank’s transition plan, Macquarie will stop issuing new chequebooks to customers from January 2024 before completely phasing out its telephone banking system in March and its cheque system by May 2024.

While banks are turning their back on cash and cheques, Australia Post has reassured the public that the government-owned corporation would continue supporting cash services throughout the country.

Australia’s postal service is now coping with a spike in demand due to the closure of regional bank branches.