Banks clear N265.44bn cheques in August

Deposit money banks in the country cleared cheques valued at N265.44 billion in August this year, according to latest data released by the Nigeria Interbank Settlement System Plc (NIBSS). The figure is N16.87 billion more than the value of cheques (N248.57billion) cleared by DMBs in July.

The NIBSS’ data also shows that the total volume of transactions through cheques rose to 366,002 in August from 344,621 in July 2021. New Telegraph’s analysis of the NIBSS’ numbers further shows that value of cheques cleared by lenders in August is the highest recorded since April this year. In fact, apart from the month of July when it headed south, dropping to N248.57 billion, the value of cheques cleared by DMBs has maintained an upward trajectory since April. It increased from N243.70 billion in April to N246.62 billion and N263.66 billion in May and June respectively.

Still, when the value of cheques cleared by lenders in August 2021 is compared with what was cleared in the corresponding period in previous years, it shows a steady drop in the value of cheque transactions. For instance, according to NIBSS’ data, the value of cheque transactions fell from N468. 40 billion in August 2017 to N396.61 billion in August 2018, declining further to N345.51 billion and N276.27 billion in August 2019 and August 2020 respectively. Analysts note that the decline in cheque usage is not peculiar to Nigeria, but a global phenomenon, which is being driven by the widespread adoption of electronic payment channels.

For instance, in South Africa, which has the continent’s biggest lenders, major banks such as Nedbank, FNB and Absa, last year, announced plans to discontinue the use of cheque payments beginning from January this year. The Payments Association of South Africa (PASA), which said that it anticipates that even more banks will take a similar action, noted that the decline in cheque usage is being exacerbated by the coronavirus outbreak.

In a statement, the association noted: “Following the COVID-19 pandemic, the physical contact required to issue, collect, and process cheques, makes it a less desirable method of payment for consumers and businesses alike. Since the start of the pandemic in South Africa, there has been a massive decline in cheque usage.” Analysts, however, trace the decline of cheques in Nigeria to 2014, when the Central Bank of Nigeria (CBN), in line with its cashless policy, released a new policy on cheque transactions. The policy placed a ban on payment of value above N10 million through cheques and directed that such payment should be made through electronic payment channels. Commenting on the sharp decline in cheque usage triggered by the cashless policy, NIBSS, in a report released in 2016, predicted that “we might witness the end of the cheque book by the year 2050.”

The company stated: “Globally, as the market share of cheques decline in the wake of increased adoption of contactless and real-time payments, a duopoly may likely develop in the non-cash market with cards and credit transfer (instant payments) dominating across most geographies. “For instance, in the Asian- Pacific (APAC), China, South Korea and Australia recorded a 20 per cent drop in cheque usage although India recorded a 10.1 per cent increase in usage due majorly to her government’s demonetisation policy.

“In Nigeria, cheque transactions have continued on a downward spiral from its peak volume of 15.3 million in 2014 to 9 million in 2018. This is a -10 per cent CAGR over the five-year period; with a growth rate of -17 per cent when compared to 2017. Although, the volume of cheque transaction is decreasing, it is fair to say that its use is still relevant, especially amongst larger value transactions, bill payments, and payroll transactions.” But while cheque usage is on the decline in Nigeria, financial experts do not expect cheques to become extinct in these parts anytime soon. A top official of a Tier 2 bank, told New Telegraph on condition of anonymity that “although e-payments are growing rapidly, many corporate bodies in this country still prefer to use cheques because they believe that this gives them some sort of protection from cybercriminals.” New Telegraph reports that Nigerian banks commenced implementation of the Nigeria Cheque Standard (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS) Version 2, on April 1, 2021.




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