Australians may soon be saying goodbye to the era of paper-based payments as the Federal Government moves to shake up the country’s payment system.
In a bold move to modernise Australia’s payment system, Treasurer Jim Chalmers has officially signed off on allowing cheques to be phased out by the end of the decade, making way for a digital revolution.
New digital services are changing the way we make payments. At the @ausbanking conference I outlined the @AlboMP Government’s plan to ensure Australia’s payments system remains fit-for-purpose now and into the future. #Banking2023Aus #auspol #ausecon https://t.co/FFsQ4rsLXh pic.twitter.com/76UHTlOrdY
— Jim Chalmers MP (@JEChalmers) June 7, 2023
Chalmers delivered a compelling speech to the Australian Banking Association in Sydney on Wednesday, May 7, highlighting the inefficiencies of the current system, which he describes as “clunky, inefficient, and cumbersome to maintain.”
Chalmers argued that the country’s current infrastructure and regulations have lagged behind the rapid changes in finance, especially in the digital economy and payments.
“Our plan for payments is about a lot more than triaging the problems we face now or playing catch-up and patch-up,” Chalmers said.
Cheque usage has experienced a significant decline of 90 per cent in the last decade. During its peak in the early 1980s, cheques represented 85 per cent of non-cash payments.
“Currently, 98 per cent of retail cheques could be serviced through internet or mobile banking and 100 per cent of those used in institutional and commercial settings,” he said.
“All this means that leaving cheques in the system is an increasingly costly way of servicing a declining fraction of payments. That’s why we want to systemically transition these transactions to digital, improving the efficiency of your sector and getting Australians their money faster.”
Chalmers also clarified that the complete elimination of cheques in Australia will not happen right away.
The government will engage in consultations with states, territories, industry, and community organisations regarding the planned phase-out. However, the government aims to cease the use of cheques and eliminate any legal obligations associated with their usage by 2028.
“Payments are the tracks on which our economy runs,” Chalmers said.
“Which means that improvements here make everything move more efficiently, reducing costs for households and businesses, freeing up resources that can be used to grow the economy.”
According to Chalmers, the “vision is to create a modern, world-class and efficient payments system that is safe, trusted, and accessible, and enables greater competition, innovation and productivity across the economy.”
Despite the push for digital payments, Chalmers has assured the public that Treasury will still allow people access to cash. The government will also be supporting the Bank@Post network that is being used in rural and remote areas in Australia.