Chequebooks on the brink of extinction as volume of transaction shrinks
Adesola Afolabi was a businessamlive reporter and Head of Financial desk.
If you have not used your chequebook as a means of facilitating payment this year, you are one of bank customers who must have sought a more savvy way of carrying out cash and bank transactions.
As Nigeria moves albeit slowly towards a totally cashless economy, the volume and significance of cheque usage in the Nigerian financial market are gradually thinning, according data obtained from the Central Bank of Nigeria (CBN).
The data indicate that cheque transactions worth N1.8 trillion as at April this year is almost four times lower than figures obtained four years ago.
A breakdown of cheque transactions from volumes recorded in 2014 against current volumes also shows a steady decline.
The total volume or number of cheque transactions carried out in the year 2014 amounted to 15.4 million units. This was valued at N7.3 trillion.
By 2015 financial year end transaction volume declined to 13.5 million units valued at N6.2 trillion, by 2016 volume of transactions had dropped further to 11.7 million units valued at N5.8 trillion reaching a record low of 10.8 million units of transactions worth N5.4 trillion.
Investigations by business a.m. on data obtained for 2018 shows the downtrend continues. As at April this year, the total volume of transactions was 3.2 million with a value peg of N1.8 trillion.
The cumulative decline from 2014 financial year to the full year ended 2017 show the volume of cheque transactions dipped 30 percent while value depreciated 26 percent.
A reduction in cheque transactions indicates business owners and financial consumers are embracing the cashless policy on the backdrop of initiatives such as the Migration to EMV cards which has significantly reduced electronic card frauds and has helped to impose more confidence in the utilization of cards as a means of payment.
The reason there has been a steady decline in the use of cheque transaction can easily be linked to the CBN cashless policy which sought to curb cash-based transactions and rather encourage electronic exchange of currency, a Nigerian banker familiar with the matter told business a.m.
The banker said «Since then, banks have increasingly promoted the use of electronic transfer. Internet and mobile banking have naturally reduced the need for cheques as most cheque transactions can now be done in minutes using e-banking.»
Adding that the rise of fintechs like Interswitch, PayPal etc with each new one deploying innovative solutions that reduce the need for cheques»
According to the banking executive, banks make more money from transaction charges on e-banking. «Fees for transfer to other banks, SMS and mail alerts are much more than you will get on cheques.»
Giving a pointer to easier accessibility, usage and processing time of alternative channels of transactions like the USSD codes, internet banking, ATMs, Pelumi Onatuga CEO Lumirolls Event and Jewels by Lumirolls said despite carrying out large value transactions, she prefers using internet banking.
“I pay my staff and vendors via transfer and will turn down cheques or cash from clients,” she said. Adding that the stress from unprocessed cheques due to little discrepancies would not warrant her using it or accepting it except there is no alternative.