Cheque usage may drop further

PETALING JAYA: With stamp duty for cheque book issuance having increased in cost by over 600%, the use of cheques by businesses may reduce further as some look to transition to other methods of payment.

This comes as most financial institutions have revised cheque leaf prices from RM0.15 to RM1 per cheque leaf, meaning that the cost of a 50-leaf cheque book increased from RM7.50 to RM50.

The rise is part of the government’s Finance Bill 2024 that was passed in December last year, gazetted on Dec 31 and came into effect on Jan 1 this year.

Federation of Malaysian Manu­facturers president Tan Sri Soh Thian Lai said the use of cheques had steadily declined over the years with the most recent cost increase set to accelerate its decline further.

He said the use of electronic payments had since begun to replace cheques for most businesses due to its lower costs.

“Using cheques requires time for clearing and settlement, whereas electronic payments are often instant and are less susceptible to forgery.

“The government’s push to promote and support the national move towards digital payments with tax incentives has also signi­ficantly pushed many to make the switch,” he said.

He added that the use of cheques was mostly among certain businesses due to entrenched practices of the company, internal controls or the need for physical documentation.

“These would generally be the traditional family-owned businesses or small and medium enterprises, particularly those run by older generations who are reluctant to adopt digital banking,” said Soh.

Datuk Abdul Rasul Abdul Razak, president of the Malaysian Indian Goldsmith and Jewellers Association, said the goldsmith and jewellery sector still relied on cheques due to the high value of their goods.

He said the use of cheques in the industry was still popular due to the physical assurance and security consignment cheques provi­ded for businesses.

“By doing all transactions through cheques, we can ensure that the transaction is not at risk of being exposed to cyber attacks or scams, which like to target big value transactions such as those done by our industry.

“Cheques also ensure that we have physical proof of transactions without having to carry large sums of cash, reducing physical and virtual risks.

“And if anything goes wrong, the cheque can be bounced, so it is safe for customers, the bank and industry players,” he said.

According to Malaysian Bar vice-president Anand Raj, most law firms have moved to online payments for government agency services such as stamp duty and land office charges even before the new cheque leaf cost revision.

However, he said that the new increased cost would likely not make any drastic transition among law firms’ clients, especially for those related to property transactions.

“The increase to RM1 per cheque leaf is still insignificant compared to the hundreds of thousands that property transactions deal with as payments are usually made in large single one-off sums.

“Only for non-property recurrent transactions would this increase likely encourage them to transition to digital payment methods,” he said, adding that law firms would still provide cheques if their clients prefer them.

Durian Manufacturer Assoc­ia­tion president Eric Chan said most players in his industry had long moved away from cheques for most of their transactions, even before the rise in stamp duty costs.

“As we deal with perishable crops, most of the payments were preferably done through cash, but the acceptance level of online payments has been on the rise ever since the Covid-19 pandemic ended.

“Cheque issuance is still needed in some cases but for daily operations, things have mostly changed to online transactions,” he said, adding that it saved on costs and time for transactions.

This overall move away from cheques is also reflected in recent data from Bank Negara, which showed that annual cheque transactions fell by more than 50% from 84.4 million transactions in 2019 to 40.9 million in 2023.

It also found that there had only been 30.1 million cheque transactions from January 2024 to September 2024. - Star