India is undergoing a massive digital push and a mere rumour of government withdrawing chequebooks created enough furore. And, why? Because businesses still love their chequebooks for transferring money. Sure, India is moving — slowly — towards cashless economy, but cheques continue to hold significance.
According to RBI data, in August, there were cheque transactions worth Rs 6,224.34 billion, nearly three times more than debit card transactions and close to 10 times more than mobile wallet transactions, despite digital transactions spiking in the post-Demonetisation era. Here’s why businesses still love chequebooks in the age of going digital:
Whether it is digital transactions or other forms of the traditional financial instrument, there is a charge involved. Writing a cheque costs nothing.
Cheques have been an integral part of India’s payment landscape. Over the years businesses have developed a sense of trust and comfort with writing cheques. Moreover, options like securing payments due in future are available with post-dated cheques.
Digital transactions do not come without the threat of Cyber risks. Cheques are safer, it is handed over someone and that someone gets the money in his account. It is natural for businesses to choose safer way especially when a large amount is involved.
Most importantly, in India, where a majority of the population is still struggling to adapt to the digital boom, especially in small cities and rural areas, writing a cheque is convenient than using a phone, entering the password, ensuring network strength, internet connection et al.
Though, cheques have their demerits too. While online transactions are quick, cheques may take 2-5 days to clear, but if it is safer, chargeless and convenient, why businesses would shift to another mode of payments, unless there is some incentive.
Pinky Khanna, Personal Tax expert at EY India, says, “Cybersecurity risks, protection against frauds and removing transaction charges from digital transactions are some of the most important steps that need to be taken before cheque books can be phased out…. Plus, educating the older generation and people in smaller cities remains key to make this a success.”