Riding the Wave of Change: Could Singapore's Cheque Phase-Out Spark a Similar Shift in Malaysia?

As Singapore considers phasing out the usage of cheques by 2025, neighboring Malaysia will undoubtably follow a similar path in the future. If Malaysia were to follow in Singapore's footsteps and eliminate cheques, it will have several implications for the country's economy and payment infrastructure.

According to a recent announcement from fintechnews.sg, Singapore is exploring phasing out cheques by 2025. The Monetary Authority of Singapore (MAS) has issued a public consultation paper to study the possibility of eliminating all corporate cheques and terminating central cheque clearing by 2025. The proposal aims to help individuals, such as senior citizens, who still use cheques to switch to other payment methods.

Cheques have been a popular payment method in Singapore for decades, but their usage has declined significantly in recent years. According to the consultation paper, the cheque transaction volume in Singapore has fallen almost two-thirds from 61 million in 2016 to less than 24 million in 2021. The share of cheque transaction volume as a proportion of payments using Fast and Secure Transfers (FAST), Inter-bank GIRO, and cheques has also fallen sharply from 32% in 2016 to only 7% in 2021.

If Singapore successfully eliminates the use of cheques by 2025, it could encourage other countries in the region, such as Malaysia, to follow suit. This transition could have a wide range of impacts on the Malaysian economy and beyond.

Firstly, the elimination of cheques could help boost the adoption of digital payment methods, similar to the situation in Singapore. Cheques are a relatively slow and outdated method of payment, and their elimination could encourage more people to use digital payment options, such as mobile payments or internet banking.

However, Malaysia may face some challenges in this transition. The country still has a significant proportion of its population that is not digitally literate, and there may be concerns about leaving these individuals behind as the country moves towards a cashless society. Additionally, there may be logistical and infrastructure challenges in setting up digital payment systems that are accessible to all Malaysians, especially in more remote or rural areas.

Another impact of eliminating cheques could be the potential increase in costs for consumers and businesses. Malaysian banks have already begun to increase the fees for processing cheques, as they aim to phase out this payment method. As a result, consumers and businesses who rely on cheques may have to pay higher transaction fees for other payment methods or digital payment services, which could impact their bottom line.

There may also be concerns about the security of digital payment systems, especially as cybercrime becomes increasingly prevalent. Banks and financial institutions would have to invest heavily in cybersecurity measures to protect consumers' data and prevent fraud.

Overall, if Malaysia were to phase out the use of cheques, it could bring about a more modern and efficient payment system. However, there may be challenges to overcome, and the country would need to ensure that all Malaysians are included in the transition to digital payments.