As Jamaica goes digital, cheques lose appeal
The pandemic-induced shift towards digital transactions has resulted in a dramatic decline in the usage of cheque to pay for goods and services for the first two months of this year, to nearly half the levels of previous periods. The decline...
The pandemic-induced shift towards digital transactions has resulted in a dramatic decline in the usage of cheque to pay for goods and services for the first two months of this year, to nearly half the levels of previous periods.
The decline continues the trend that’s been showing up in central bank data since the end of last year.
Just over 1.1 million cheques were issued in January and February, according to the latest Payment System Data Bulletin published by the Bank of Jamaica, BOJ, a 41 per cent decline from 1.93 million in the comparative period in 2020, and a 47 per cent drop from 2.08 million in 2019.
“The increase in electronic funded transfers, or EFT transactions, for the period resulted from an increase in direct credit transactions as banks increasingly require their customers to use salary deductions for payments in an effort to reduce their customers’ risk of default,” the BOJ noted in its Quarterly Monetary Policy Report released last week.
“The reduction in cheques partly resulted from lower spending following the Christmas season, as well as consumers’ preference for using electronic means of payment and cash during the pandemic,” the report said.
EFTs primarily relate to standing orders and small, automated clearing house transactions.
With cheque volumes slashed nearly in half, the dollar value of these transactions are down by more than a third, 35 per cent, to $173 billion up to February. For the year 2020, the value of cheque transactions fell 26 per cent below the levels seen in 2019, according to the BOJ payments bulletin.
Prior to the pandemic, cheque transactions surpassed $120 billion on a monthly basis, but during the pandemic, transaction values reached or climbed above $100 billion for only six months of the year.
For January and February of this year, the monthly average was below $90 billion.
December 2020 was the final time, to date, that monthly cheques surpassed $100 billion in a month. It hit $108 billion in December 2020, from $148 billion in December 2019. The value of monthly cheques only crossed the $100-billion mark for six months of the year. These months included January 2020, at $138 billion; February, at $123 billion; March, at $135 billion; July, at $100.5 billion; September, at $100 billion; and December, at $108 billion. Before the pandemic, in 2019 cheques would always surpass the $120- billion mark.