The advance in technology has rendered the use of a cheque as a payment method archaic.
Cheques are an expensive form of payment and over time, have become most susceptible to fraudulent activity. To this end, there are far more effective means to transact that are not only safer but are far cheaper.
Kenneth Matlhole at FNB Business says that much of the usage of cheques is largely driven by business-to-business transactions that are steeped in traditional process.
“A large portion of cheque users are from specific industries that have cheque payments built into their business operations, many of which would benefit from moving away from Cheque payments in terms of efficiency, and risk,” explains Matlhole.
From an analysis of its customer base, FNB has identified sectors that make the most use of cheques, namely: schools, churches, scrap metal dealers, agriculture, the motor industry, fiduciary services and auctioneers.
In each instance, Matlhole proposes that the banking system has far more technologically advanced alternatives that are far cheaper to use.
“One must consider the administration process, storage of physical paper that is required for cheques as well as the waiting period for a cheque to clear. This is in contrast with electronic payments which can be done in minutes, securely.” explains Matlhole.
FNB provides three alternatives that businesses can use instead of cheque payments:
Online Banking –
For schools, cheques are firstly used to ensure segregation of duties, they require someone to make the payment and another individual to approve it, secondly Cheques are used for wages and thirdly to pay third party service providers. Online Banking provides the ability for schools and other business performing similar functions with cheques to manage mandates, through a doer and checker process while also enabling electronic payments at a reduced time and increased safety.
Mobile payments –
Another use-case is using cheques to pay wages or making payments to individuals that don’t have a bank account. Most of the banks have functionalities that enable one party to pay another using only their cellphone number.
Mobile Banking Apps –
The use of mobile apps is growing and financial service providers see mobile apps as the main gateway into a range of solutions. For example, FNB has functionality such as Smart InContact that allows users to safely approve Online Banking transactions on the Banking App, verify devices that login to your profile, and use secure messaging to immediately report any fraudulent transactions 24/7.
“Moving away from cheques as a means of receiving or making payment altogether can go a long way to reduce costs and increase convenience for businesses,” concludes Matlhole.