Australia is set to eliminate cheques by 2030, with banks taking proactive steps ahead of the government’s schedule. With less than one percent of transactions conducted through this method, who will be impacted?

Last year, Treasurer Jim Chalmers announced the government’s plan, emphasising that the transition would be gradual, coordinated, and inclusive. He also mentioned that processing cheques was costly for banks.

Now Brisbane pensioner Michael Coogan will need to bear that expense. Mr. Coogan opts for using cheques as his method of paying rent. When his bank discontinues processing cheques this week, he will incur a charge simply to pay his rent. While other banks will continue to handle cheques for the time being, the associated cost begins at approximately 10 dollars. 

“Of course there will be people who use BPAY but I’m not comfortable with it,” Mr Coogan, who lives with his wife in Brisbane’s north, said. 

“We don’t do any banking online because we’re not familiar enough with computers. Computers don’t figure largely in our lives.” 

Cheque transactions only make up 0.2 percent, according to a survey by the Reserve Bank of Australia (RBA) in 2022. Consumer payments made by cheque accounted for only 0.1 percent of all transactions. According to the Australian Banking Association (ABA), cheque usage has decreased by almost 90% over the past ten years. According to the treasurer, the cost for banks to process a cheque is over five dollars on average and is expected to rise as fewer people opt for this payment method. 

In a recent paper discussing the phasing out of the country’s cheque system, Mr. Chalmers acknowledged that the costs of such reforms would impact certain groups more than others, particularly vulnerable Australians and those lacking a stable internet connection. 

Still a “hasty or disorderly exit that leaves vulnerable cohorts of the community behind is in no one’s interest”, he said. 

The consultation concluded this month, with some banks already ceasing or planning to cease cheque services well before the government’s schedule. 

Advocate beyond mortgage support

According to Chris Grice, CEO of National Seniors Australia, cheques are a warning sign of the impact a move towards a cashless society will have on those who are vulnerable.

“Any society can embrace change but you’ve always got to bring everybody with you, and the concern is we’re leaving a cohort behind by racing towards this digital economy,” he said.

Mr. Grice is advocating for banks to reconsider their branch closures in order to provide customers with in-person support during their transition to digital services. 

“It would be good to see a number of banks across the country start to really look at their customers that have been customers for 40, 50, 60 years,” he said. 

“The banks have got to really make sure that as a system they are providing support to the entire community, not just the cohort that have mortgages.”

According to an analysis by the firm AreaSearch, over the past six years up to 2023, more than 1,600 bank branches have shut down, with hundreds of regional branches facing potential closure. National Seniors Australia is convening in Canberra today, with the attendance of politicians such as north Queensland MP Bob Katter. Katter recently gained attention when a Federal Parliament cafe declined his cash payment for lunch earlier this month.

So what is the current situation for Mr. Coogan and his wife?

They are required to make rent payments through a third-party platform, costing approximately eight dollars per quarter. According to him, it adds up for a couple living on a fixed income. 

“Every cent counts, and to all those 33-year-olds out there, one day you will be 53 and 63 and you’ll discover that your income shrinks, the ability to borrow evaporates, and your credit cards will be questioned,” Mr Coogan said. 

Challenges of rent payment

Under legislation that the Queensland Parliament approved this year, agents will have to offer renters a free method of payment. Similar laws already exist in Victoria, South Australia, Tasmania, and New South Wales. 

The CEO of Tenants Queensland, Penny Carr, said that the elimination of cheques would force more tenants to use third-party platforms, which charge a fee for their services. 

“There are third-party contracts where in effect, the agents are subcontracting the rent payment and revenue collection requirements and also cost-shifting on to the tenant,” Ms Carr said. 

“It just makes sense that you shouldn’t be charged for paying your rent.”

In a statement, the ABA said banks recognised a “very small number of customers” still used cheques and were “ready to support them to transition to other easier and more accessible forms of payments”. 

“This support includes being up-front and transparent with customers about future policies around cheques, so they have sufficient notice to switch to other payment options,” a spokesperson said.

Editors Publicspectrum

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