Monetary Authority Of Singapore Announces End-2025 Timeline To Eliminate Corporate Cheques - Charges For Individual And Corporate Cheques Set To Increase By 1 November 2023

The Monetary Authority of Singapore (MAS) today announced that all corporate cheques will be eliminated by end-2025 while individuals will still be able to use cheques for a period after 2025. With cheque usage in Singapore falling steadily, the cost of processing each cheque has been rising [1] .  To recover these cheque processing costs, banks will therefore commence charging for Singapore Dollar (SGD)-denominated cheques by 1 November 2023. 

2   MAS 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. 

3   Annual cheque transaction volume has declined by almost 70% from 61 million in 2016 to less than 19 million in 2022, alongside growing adoption of e-payments by both corporates and individuals [2] . With the fixed cost incurred in cheque clearing, the average cost of clearing a cheque has quadrupled since 2016 to $0.40 in 2021.  Most banks have to-date been subsidising the cost of cheque processing. But if cheque volumes fall by a further 70% by 2025 [3] , the cost of clearing a cheque is projected to increase to between $2.00 and $6.00 by 2025.  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.

4   In a consultation paper published on 2 November 2022, MAS and the Payments Council [4] proposed a roadmap to terminate the cheque truncation system (CTS) and transit all users out of usage of cheques. The proposals received significant support as well as useful feedback from both the financial services sector and business communities. MAS will take this feedback into account and work with ABS on the following key measures to facilitate the transition to zero corporate cheques by end-2025: 

(i) ABS will work with the Domestic Systematically Important Banks (D-SIBs) [5] to build an electronic deferred payment (EDP) solution to allow users to make a deferred payment or issue a cashiers’ order, without the need for cheques. The EDP solution will leverage on existing payments solutions like PayNow and GIRO and be ready by 2025 [6] . 

(ii) Banks will cease the issuance of new cheque books to all corporates in 2025, after the launch of the EDP solution.

(iii) The D-SIBs in Singapore will commence charges for SGD-denominated cheques issued by both corporates and individuals by 1 November 2023, while other banks will do so by 1 July 2024. Charges for SGD-denominated cheques deposited by corporates and individuals will be implemented in phases [7] . The charges will vary among banks.  

5   Further details on the initiatives are set out in the response to the public consultation, which may be viewed at this link   (571 KB).

6   To ensure that Singapore’s e-payment journey is inclusive, individual cheque users will still be able to use cheques for a period beyond 2025. This will provide the remaining individual users with a longer runway to switch to alternative payment methods. In the meantime, banks will be reaching out to customers who have yet to convert to digital payments to allay their concerns. 

7   MAS will further study the use of cheques by individuals, and develop appropriate initiatives to assist remaining individual cheque users in their transition to alternative payment methods such as PayNow, FAST, GIRO, and MEPS+. MAS will conduct a second public consultation next year to set out the initiatives and timeline to eliminate individual cheques and terminate the CTS.

8   MAS and ABS encourage all cheque users to switch to other payment methods as the industry prepares to retire the CTS. This is in line with Singapore's Smart Nation vision where everyone has access to fast, simple, and secure payments.