Why Cheques Won’t Disappear Anytime Soon

Retailers stopped accepting cheques several years ago as consumer preferences shifted from paper to plastic.  Many feared that the final nail in the coffin for cheques came when the federal government announced plans to phase out cheques for Canada Pension Plan payments and tax refunds by April 2016.  After that it will be direct deposit only.

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But reports of the death of this ancient banking device may be premature.  It is still alive and well in the electronic age even though you can now email money to your kids or landlord and use your phone to deposit an ‘e-cheque.’

Mobile cheque deposit

Death of cheques may be premature

Cheque use has been declining at a rate of 5 percent a year for the past decade, according to the Canadian Bankers Association, but even so, Canadian financial institutions still processed nearly 1 billion cheques last year.

We need cheques to pay rent, donate to school fundraisers, and sign-up for children’s activities.  We write them to buy cars, put down deposits and pay contractors for renovations.

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That’s why cheques will be around for a while yet says Charaka Kithulegoda, Chief Information Officer at Tangerine.  Kithulegoda believes it will be a gradual thing much like the demise of the payphone.

“Payphones didn’t just disappear overnight,” he says.  “It took a decade or more, and you still see the odd one around today.”

Mobile cheque deposits

Last spring, a joint initiative of credit unions across the country, led by British Columbia’s Westminster Savings, launched “Deposit Anywhere”, a smartphone app that lets you deposit a cheque from your phone or tablet.

Two months later, Tangerine helped bring remote cheque deposit technology to the mainstream when it introduced the feature for its mobile banking clients.

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Customers were slow to adopt the technology at first.  In June, 2013, the month remote deposit capture was introduced, the online bank’s email money transfers outnumbered mobile cheque deposits three-to-one.

A year later, the number of mobile cheque deposits now outnumbers email money transfers two-to-one.

CIBC became the first of the big banks to allow its customers to deposit cheques with their smartphone or tablet when it launched its eDeposit feature last November.

President’s Choice Financial, pioneers of no-fee banking in Canada, has offered customers free cheques since entering the market more than 15 years ago.

The bank has seen a slight decrease in the number of cheques requested by its customers, but they are still a popular option and will continue to be offered free, says Michelle Reidel, a public relations manager at the bank.

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PC Financial is planning to introduce mobile cheque deposits this year. Other banks are expected to follow suit.

Interac e-Transfers

When Interac, the association that operates a national payment network of bank machines and debit terminals, launched email money transfers in 2002, it offered a new way to send money with just the recipient’s e-mail address or mobile number.

Teri Murphy, senior manager at Interac Association, says the service has grown by an average of 47 percent over the last three years.

Tangerine’s Kithulegoda says banks charges between $1 to $1.50 to send an e-Transfer, while 100 cheques will only cost you between $40 and $50 upfront, or about 40 to 50 cents each.

Most banks limit how much you can send by e-Transfer in a day, but with a cheque, you’re only limited by the amount in your bank account.

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Finally, you can write post-dated cheques to pay for recurring expenses like rent and school fees, but at this time it’s not possible to set up recurring Interac e-Transfers.

“Sending payments from business-to-person, and vice versa, are a more complicated process and will take time to develop,” said Kithulegoda.

As technology improves, and consumers and industry accept the shift toward mobile and electronic payments, cheques will slowly go the way of the Dodo.

But for now, cheques still account for 40 percent of all payments made in Canada (in terms of dollar value) and won’t disappear anytime soon.


17 Responses to Why Cheques Won’t Disappear Anytime Soon

  1. Perhaps for the younger generation and for everyday use, cheques are the equivalent of monetary dinosaurs. I bemoan the inefficiency of receiving cheques whenever I do to my wife. But if my credit union were to get with the times and offer mobile cheque deposits, I wouldn’t be complaining so much. Haha first world problems…

  2. It is a bit mindboggling that it does not seem to be possible to adopt the giro system that is in use across Europe for decades.

    Just enter the target account number, the value and a payment purpose text line, and the money is transferred there within a day, also recurring and postdated, without any fees. No need to set up payees; you just need their account number.

    If the banks of, say, Albania can manage that, why can’t ours?

    • @Mountain Ted – That does seem easier. So does the email money transfer, but there are way too many rules and restrictions in its current format.

  3. Physical cheques are so annoying, but you are probably right. On occasion I seem to need one for something – I am thinking 3 or 4 times per year. I appreciate your reminder – I may need one today if I buy that new motorcycle and want to use zero percent financing. Who can even find their chequebook?

    Two years ago I converted my business accountant off them for settling our account. Such anguish until she actually tried it. Many slow adapters out there.

    I think chequing accounts will die an even harder death. I have not had one for 15 years, and always use Line of Credit cheques. But TD just won’t deal with me if I want to use VISA for sending money overseas. I need a “real” chequing account for that. Or to take my business elsewhere (I end up in one of those sleazy-looking strip mall money stores)

    All for now – I have to see if my LOC chequebook is burried in my sock drawer.

    • @Robert – I can never find my chequebook, and in the middle of basement renovations is when I’ve needed to get at it. Now that September is around the corner I’m sure the school fundraisers and activities will be starting up soon, too.

      • lol I hear you. It was funny the article came out as I was starting a chequebook search as I need it today. Last date in it was May 2013 for $17.45. Heck of a deal on a mesh motorcycle jacket!

  4. I still use cheques semi-frequently. I pay my rent with them, I pay a personal loan with them. I pay my parents back when we go to Costco with them (I don’t have a membership – I just mooch theirs!). I love my free cheques from PC. That being said, I hate the waiting period with them.

    If I had free email transfers (I do through Tangerine, but it’s a little more work for the sender) then I’d be all over that.

    • @Alicia – I love using email money transfers and don’t find them cumbersome at all for small amounts. I’ve sent them via mobile app from both my Tangerine and TD accounts. I’ve used it for fantasy football league fees and prize money, cleaning fees, pet sitting fees, basically any person-to-person transaction where the recipient is willing to accept them. I just wish more recipients (and businesses) were willing to accept them.

      I’d like to see a recurring option so that landlords could accept rent that way.

  5. PayPal..In the US its so easy. Direct payment, company to individual, individual to company, individual to individual etc. The funds are usually available in your PayPal account the same day. Fees vary but are reasonable, service is great, easiest way to send between countries. Right from your computer or smart phone.

    • @Harvey – PayPal works well if you send the money as a gift to a friend or family member (no fees, if I recall correctly). But if you send a large amount then the 3 percent fee is a big deal.

  6. I use the CIBC mobile cheque deposit whenever friends give me cheques (for whatever); I have a few tradespeople who don’t yet accept email transfers so I’m forced to write a cheque AND go to the post office to mail it. A few years ago when I banked exclusively with PC Financial I ran into a snag you don’t have with a brick and mortar bank – how do you get a certified cheque? It turns out you don’t – they increased my POS limit for 2 hours so I could use my debit card!

    • @Miriam – I think some of those workarounds are the reason why many people stick with the big banks…sometimes it’s just more convenient to have access to a full service branch.

  7. I don’t really use cheques but occasionally I’m forced to use it because other people want cheques.

    I wish money transfer is more readily available to use.

  8. Schools are the primary reason why we keep cheques handy. Whether it is paying for trips, Scholastic book orders, or other fundraisers throughout the year, cheques are golden for paying in these instances. It had certainly come in handy when the school said they didn’t receive payment and we were able to pull up the image of the ‘cashed’ cheque online. :)

  9. A friend of ours from Australia couldn’t figure out why we use cheques at all…but there are so, so many reasons! I am surprised that the mobile deposits are that popular. I’ve never bothered to figure out how any of that stuff works. Maybe now that I have a new phone I will.
    Another example of when cheques are used frequently is situations where two signors are required, such as non-profits and sports organizations. I don’t see that going away any time soon either.

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