As we as an industry and society plan our shift away from cheques (and soon BECS), we are now facing a tangibly close future without these two stalwarts of our payment system. Whilst it is potentially easy to hit fast-forward, (maybe that’s even a dated reference... perhaps to hit ‘skip’ would be more appropriate) and think about a time when cheques are no longer with us, it is the imminent transition period that interests me.
It is in the transition that edge cases shake out, that carefully constructed systems become wobbly or strengthen and unexpected successes emerge.
Why are we saying goodbye to cheques?
The thing is that cheques, more than BECS, represent a time and an era in business and personal finances that is now in the rear-view mirror. Cheques are from a time when trust was assumed – and not baked into a system by design. To many, cheques represent personal financial control and holding a cheque book is to be financially included and empowered.
On the other hand, cheques are an inconvenient hangover from a bygone era representing cost, bottlenecks, and frustrating slowdowns for otherwise upgraded systems.
Both perspectives are correct.
The transition period, if managed well, will bring both sides happily onto the same plain.
The thing with cheques is their real-world tangibility. Unlike BECS (which is a separate issue to unpack), cheques do not have an immediate and obvious replacement offering many like-for-like qualities and experiences (as is the case with BECS and NPP). To get rid of cheques without disenfranchising the businesses and people who use them requires a nuanced approach.
What does this mean for Payers?
For payers, cheques represent control and the ability to transact in an environment that is comfortable and familiar. Switching payments being made by cheque to another payment system requires a structured payer-centric approach. We have found this as we work with enterprises who have adopted our Smart Payment Agreements for their operations and their payers. The step through, cadence of information presented and the surety of experience, regardless of payment method, all work to create a comfortable experience where the payer feels enfranchised and in control. Approaching the task from an ‘overview’ level that leaves the actual transaction route to the last piece, means that the payer has the same experience regardless of their ultimate payment choice. Taking an analogue experience with cheques and turning that into a digital process demands this steady and considerate experience.
What does this mean for businesses and banks?
The trickier to solve issue is the funds moving the other way – institutions or enterprises paying out to their consumers, clients, or members (think refunds, insurance payouts, benefits etc.). Each of these institutions will need to wrestle with a few key factors – disbursement reconciliation system changes, managing recipient experience and actual funds movement. Having worked with institutions over the years who manage pay-outs, we have found that the same core lessons hold true. Approaching the situation from a Smart Payment Agreement™ perspective, we have found that consistency regardless of transaction type, communication attached to the circumstance not the transaction and increased agreement metadata mean that each party’s needs are met in a scalable and responsive way.
Australia is facing changes to our payment systems that have been brewing for years and we are about to see the rubber hit the road and real impact will start to be felt by institutions, businesses, and payers. We think the best thing to be done is to think above the transaction and zoom out to the agreement level, only then will we see the true promise of moving our financial system forward come true.
How can Paypa Plane help?
If you need to think about your strategy in the new payments landscape and you have not considered Smart Payment Agreements for your institution, enterprise or critically your customers, now is the time to do so.
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