COVID-19: Will it kill paper cheques for good?
E-commerce has been sending the use of paper cheques into a free fall for some time, but COVID-19 may be their death sentence.
When the global pandemic shut down many businesses in mid-March and forced many employees to work from home, the digital push gained momentum. But when it comes to insurance premium payments or issuing rebates, paper cheques were still being sent out. That means someone had to write the cheque, put it in an envelope, mail it and have the item go though the postal service before ending up in the hands of the recipient.
In a time that emphasizes limiting physical contact with people and non-personal items, cheques seem out of place.
“I think we were moving in that direction,” Nancy Babeu, regional sales director of Primaco, told Canadian Underwriter of the move to digital payments. “It was kind of going in that direction … But I think with the reality of what just happened (with COVID-19) – it kind of pushed forward much quicker.”
There have been systems in place to work electronically, she noted as a panellist during a Canadian Underwriter webinar, COVID-19 and the Economy: Protecting Your Receivables, whether it be payment requests or digital signatures. In a pandemic world, using such technologies have been pushed to the forefront.
“Or, if you mail the cheque, it’s [taking] much longer. It’s an issue because there’s no one at the office to receive it,” Babeu said.
“I think it (COVID) just pushed us along much quicker and it will just keep evolving because it’s where we’re going and where people want [to be].”
Canadians – at that time – wrote an average of three cheques each month, worth a total of $245. Two-thirds of Canadians were ready to ditch cheques, and 27 per cent of them were so anti-cheque that they were prepared to pay extra to process a cheque-free transaction electronically. Forty-eight per cent were willing to give up their privacy for more convenient methods.
Countries abandon cheques
The move to eliminate cheques has already happened in some countries around the globe. In 2016, a Globe and Mail article stated Germany, Sweden and Norway used almost no written cheques, while Finland abandoned the personal cheque in 1993 and Poland followed suit in 2006. These countries now rely on payment systems that are totally electronic.
Here at home, commercial businesses and those in business-to-business dealings have been accelerating the use of digital payments, said webinar panellist David Dienesch, board chair of the Receivables Insurance Association of Canada and president and chief agent of Euler Hermes Canada. “Without a doubt, we’re getting certainly more of our clients not sending us cheques anymore.”
The pandemic has forced needed change that may have sat on the sidelines previously, said panellist Karen Ritchie, president of Toronto Insurance Council and vice president of Baird Macgregor Insurance Brokers LP.
“I think [the pandemic] put more emphasis on, ‘Let’s move the needle along quicker. Let’s get moving faster in that direction,’” she said. “I think we’ve been talking about it and trying to get there. But once we were forced into the situation, I think we realized we’re further along than we thought we were in being able to work digitally.”
If something good has come out of the COVID-19 pandemic, it’s this change in particular, Babeu said.
“Cheques are looking like they’re going to be more and more a thing of the past so the electronics and online and all of those types of payment systems are going to get more and more headway,” she said. “It’s going to be the norm, even when we get back to what we think is a normal type of situation.”
RELATED READING:UPDATED: Emergency relief offered by insurers