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Digitise cheque book

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According to yourmoney.com, the cheque (American English) was invented by the Romans in 352 BC but become widespread in Amsterdam during the 16th century.

More appropriately called a check in Queen’s language, the cheque system was so christened because cashiers had to physically ‘check’ the signature on the note instructing them to pay out the money.

Although, the system has, over the years, drifted away from being instructions written on any piece of paper authorising a bank to pay someone to customary piece of paper decorated with colours, emblems and bank’s security features, the ethos remain, somebody has to verify your signature and pay.

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An attention-grabbing banking folklore has it that two bank messengers carrying a heavy-load of check vouchers to each others’ bank premises bumped into each other at a crowded tavern. The two reasoned that it would be much easier for the two to meet every day at the same place to exchange their cheques.

That saved them a trip to the other’s bank and resultantly afforded them more time to imbibe more of the bitter stuff at the tavern. It did not take long before all the messengers connived to be meeting in the same tavern; and this is how the cheque clearing house, a central place where network of banks clear cheques issued against one another, came into being.

According to Cheque and Credit Clearing Company (C&CCC) check payment volumes hit the ceiling in 1990; four billion cheques were issued in the UK alone. As Credit card, point-of-sale (pos) and Internet banking became more popular, cheque payments started to lose its charm. In 2014, only 644 million cheques were issued in the UK, an 84% decrease since 1990. The figure is expected to shrink further to 255 million checks by 2024.

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Statistics indicate that a staggering 65 percent of people over 65 years old still prefer to write cheques compared to five percent of the 16-24’ old. This is an indicator that it is an issue of love or abhorrent attitude in embracing technology.

That said, how can the cheque be digitised? The clearing houses of today do not need physical cheques; they use images of cheques to complete the transaction.

Banks upload the cheque images unto clearing software. It is, therefore, possible for banks to upgrade their mobile apps to offer customers scanning facilities. After all, smartphones and tablets of these days have scanning abilities. In this way, a customer who is paid through a cheque does not have to travel to the bank.

Mobile systems like FDH 525 or NBM Mo 626 are actually payment systems that have been tested and ready to revival the cheque system. The challenge is that a hoary piece of monetary policy drags the system; it can take up to seven working days for funds to clear when funds are wired to an account held with a different bank.

While the mobile apps are personal account centric, some of them like Mo626 have been upgraded to serve corporate customers.

Not far from now, cheque-books will disappear from the face of the earth. Cheques have served a greater purpose for a long time but, like many African politicians, they have outlived their welcome and are past their useful shelf life; they must be forced or peacefully allowed to exit the scene.

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