National Australia Bank and in turn credit unions and mutual banks are doing their bit to hasten the death warrant for a long-endangered banking product, the cheque.
NAB recently informed mutual ADIs that from the beginning of March the bank will no longer process or honour many of these third party cheques.
This applies broadly to member (or personal) chequing services across the sector.
There are exceptions for the corporate cheque facilities of larger mutual ADIs.
NAB is also disabling credit union deposit book services at its branches from the end of this month. This is not material, given the deposit taking services afforded the sector through Bank@Post.
For clarity, NAB will maintain current cheque services for its own customers.
The bank’s decision to terminate follows the best part of a 40-year relationship between NAB and its mutual ADI clients. The bank’s cheque clearing services were the cornerstone of a workaround engineered to enable the then much more disparate credit union sector to gain access to the cheque clearing stream.
Seemingly, this is a decision resting largely with the bank rather than following consultations with the mutual ADI clients. Cuscal Payments, for instance, at its website still declares that “cheques remain an essential service for many financial institutions”.
Mutuals’ members are being directed to the obvious substitutes such as Electronic Funds Transfers and an instant payment to a PayId or BSB and Account number.
While irritating for a slender number of credit union and mutual bank members, the demise of member chequing is symbolic step to a complete and final wind down of the remnants of the cheque system in Australia.
This is a sensitive but not at all complex topic that’s been the subject of sober report after sober report over the last decade or so.
All these studies have found essentially the same thing: ‘It’s curtains for the cheque system … one day … but not quite yet,’ largely out of deference to reluctant adopters of digital payments and the pleadings of the charity sector.
Interestingly, the number of personal cheque accounts stubbornly increases most months, RBA payments data shows, even as the industry looks ahead to the final days of these antiquated payments vouchers.