MAS: End corporate cheques by end-2025, banks to charge for processing from 1 Nov

SINGAPORE — All corporate cheques will be eliminated by end-2025 while individuals will still be able to use cheques for a period after 2025, the Monetary Authority of Singapore (MAS) announced on Friday (28 July).

The central bank said that the decision was made because cheque usage in Singapore has been falling steadily – cheque transaction volumes have decreased by almost 70 per cent from 61 million in 2016 to less than 19 million in 2022. This is partly due to the growing adoption of digital payment methods by both corporates and individuals.

Meanwhile, the cost of processing each cheque, which includes cheque clearing costs and other bank operating costs, has been rising.

"Most banks have to-date been subsidising the cost of cheque processing. But if cheque volumes fall by a further 70 per cent by 2025, the cost of clearing a cheque is projected to increase to between S$2.00 and S$6.00 by 2025," MAS said. "Banks will no longer be able to absorb these costs and will have to reflect the cost of cheque processing in their charges to their customers."

To recover cheque processing costs, MAS added, banks will therefore commence charging for Singapore Dollar-denominated cheques by 1 November, starting with Domestic Systematically Important Banks (D-SIBs), including Citibank, DBS Bank, HSBC, Maybank, OCBC Singapore, Standard Chartered Bank and UOB. Charges will vary among banks.

Other banks will do so by 1 July 2024.

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MAS said that it is working closely with the Association of Banks in Singapore (ABS), the financial industry and government agencies on a series of initiatives aimed at transiting cheque users to e-payment solutions.

"This will include a specific e-payment solution that can serve as an alternative for post-dated cheques. This will provide greater convenience to corporates and individuals," the central bank said.

MAS and ABS encourage all cheque users to switch to other payment methods as the industry prepares to retire the cheque truncation system (CTS).

MAS said that banks will be reaching out to customers and assisting remaining individual cheque users in their transition to alternative payment methods such as PayNow, FAST, GIRO, and MEPS+.

A second public consultation will be conducted by MAS next year to set out the initiatives and timeline to eliminate individual cheques and terminate the CTS.

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