Australia is set to be a cheque-less society by the end of the decade, if the federal government has its way. 

Treasurer Jim Chalmers announced on Wednesday morning that his government would be moving to phase out cheques by no later than 2030.

“We know that usage of cheques has been declining,” he said. 

“This is largely because digital transactions are easier, cheaper and more accessible. 

“In fact, 98 per cent of retail cheques could be serviced through internet or mobile banking.”

Why phase out cheques?

Because cheques only account for only 0.2 per cent of all payments, according to figures from an Australian Banking Association (ABA) report. 

Cheque payments are also more expensive to process compared to other payment types — and it’s been that way for some time.  

A report for the Reserve Bank of Australia in 2008 — that’s 15 years ago — said it was costly then, saying it cost financial $4.22 to process cheques. 

Costs incurred by the collecting institution include:

• transporting cheques to the cheque processing centre 
• amount encoding
• capture of individual cheque information including validation to enable creation of electronic files
• taking electronic images of the physical instrument
• sorting and batching cheques
• sending cheques to the paying institution

A quick whip around of the big four banks reveals a smattering of different fees associated with cheques — here’s a brief summary of cheque issuing fees:

• ANZ: $10 at an ANZ branch, $7.50 via online banking for personal accounts
• Commonwealth Bank: $15  
• NAB: $12
• Westpac: $0 for online, $10 for “staff-assisted”

Some banks will also charge fees for cashing cheques. 

“Leaving cheques in the system is an increasingly costly way of servicing a tiny and declining fraction of payments,” Mr Chalmers said. 

What methods are people using?

Let’s look at the 2022 figures from the ABA’s latest report.

Here’s a breakdown of consumer payments by type:

• Cheque: 0.2 per cent
• Other:  12 per cent 
• Cash: 13 per cent
• Credit and charge cards: 25 per cent
• Debit cards: 50 per cent

The “other” category is made up of the following payment types:

• Bank cheques 
• BNPL
• Bpay 
• Cabcharge
• Direct Entry
• Gift and welfare cards
• Internet/phone banking
• Money order
• Paypal
• Prepaid

When you compare these to the figures from 2007, you’ll notice a decline in cash and cheque use. 

But there was an increase in all other payment types. 

Mobile wallet use is on the up

A mobile wallet means people register their bank card to use on their mobile devices — phones and smart watches — meaning they can make payments without needing to carry their physical card. 

“Australians are not just leaving their wallets at home, they are digitising them,” ABA chief executive Anna Bligh said. 

“The popularity of mobile wallet transactions has sky-rocketed from $746 million in 2018 to more than $93 billion in 2022.”

More than 15.3 million cards were registered to mobile wallets in 2022. 

That’s a significant increase from 2018, when there were only about 2 million cards registered to mobile wallets. 

Branch interactions are down

The figures showed just 0.7 per cent of banking interactions were carried out at a branch. 

That’s a 46 per cent decline from 2019.

Meanwhile, 98.9 per cent of interactions took place digitally, via online and app interactions. 

But the APA’s online and app interaction figures were based on daily logins and it’s unclear exactly what kind of interactions occurred in these logins.

“A single log in may lead to multiple interactions and hence is likely to be understated,” the report said.

This means we don’t know know how many of these interactions were customers checking their bank balances out of habit and how many were customers carrying out transactions. 

The ABA said people were going to branches less because “most transactions can conveniently be done online or by phone”.

It made a point of saying that customers in regional areas — where internet services are typically less reliable than metropolitan areas — were cutting back on branch visits at similar rates to their city counterparts. 

“Regional customers are reducing their branch interactions for the same reasons as metro customers: more than 80 per cent prefer online or phone channels for their main banking activities and 89 per cent use online banking,” the report said.

And while the number of branches decreased in the past 20 years, the APA stressed that Australians got more more bank branches than similar countries.

“For banks that participate in Bank@Post, the report shows that 98 per cent of branch closures occurred within three kilometres of a branch of the same brand or one of the 3,540 Bank@Post locations across the country – a service that is funded by Australian banks,” Ms Bligh said. 

The report showed Australia had a bank branch density of 24 bank branches per 100,000 adults.

It compared that countries with similar urbanisation rates to Australia: New Zealand and Finland. 

New Zealand has 18 branches per 100,000 adults, while Finland has six per 100,000 adults.

“While customers drive these rapid shifts to digital banking and payments, there will continue to be a role for face-to-face banking services,” Ms Bligh said. 

How will cheques be phased out?

“This transaction will be gradual, coordinated, inclusive and respectful,” Mr Chalmers said. 

“Public consultation with the whole community will take place before the end of the year — including with the states and territories

“We will work with you to make sure that every Australian gets the assistance that they need to make this important change.”