12 October 2023
Mel Rush: What does it mean if you’ve got uncashed cheques in your wallet? Will they continue to be honored over time? Anna Bligh is CEO of the Australian Banking Association. Anna Bligh good morning.
Anna Bligh: Good morning. How are you?
Mel Rush: Very well, thanks, Anna. Look, this latest news is a little bit of a reminder really isn’t it? The decision was made some time ago. Is it just due to the fact that people have moved on?
Anna Bligh: Well, I think we’re seeing a dramatic change in how Australians are paying for goods and services. It’s not that long ago when all we used was cash or cheques. If you think about it, now we might use some cash for some things, some people still use cheques for some things, but mostly, people are using electronic transfers, tap-and-go cards, using their phone, because they’ve got their card in a digital wallet – I’ve seen people actually using their smartwatches to pay for things. So, we’re in the middle of a very big transition from the way that we used to pay for goods and services and make transactions to a vastly different landscape. Cheques are now down to 0.2% of all payments in Australia, that’s a dramatic shift in about 15 years.
Mel Rush: It’s significant isn’t it? Do cheques have any benefits over other payment systems?
Anna Bligh: Well, I think that for many people, cheques have been a very important part of how they manage their money in the past. I think those people who still use them would say that they would still use them for very big purchases, where they don’t want to carry cash. So if you’re buying a very big item, where you’re not able, for one reason or another to make the transfer on a card or a credit card or debit card – but those things are disappearing increasingly, whether it’s a real estate agent taking a deposit on a house or car dealer taking a payment for a vehicle, they are now very happy to take electronic transfers. So, I think what we’re seeing is if it’s now down to 0.2%, in 2023, what will it be like in 2030? We can see that it’s fast disappearing, so this is about making sure that it’s a very orderly transition, where people are well prepared for it in advance.
Mel Rush: Interestingly though Anna, there have been quite a few power outages over time up my way, and lo and behold, in the mail, I get this cheque for $80 saying, ‘sorry you’ve had so many power outages, here’s a way of compensating you.’ So, the other way around, not necessarily you are paying, but a way of gaining compensation so to speak. Does that mean we’re not going to be compensated anymore if government departments don’t send cheques?
Anna Bligh: Well, if you think about it, many people now already received their tax return for example, via electronic transfer. They no longer get a tax cheque or a tax return cheque in the mail. The reason I think the government has given seven years’ notice here is exactly for the reasons you’ve just identified. Big government departments often still use cheques. We often see people like lawyers using cheques, so I do think this is as much about giving notice to the people who issue cheques as it is to the community who might either use them for themselves or receive them. I think about this in the same way as when we had to change from an analog to a digital radio. If you give people enough notice, and make sure the whole community is prepared for it, then I think it makes the transition – and change is never easy – but the more notice we have and the more arrangements that are put in place, I think the easier it becomes for everybody. I should say our colleagues in New Zealand did this two years ago with six months’ notice. Now I’m not suggesting we do it that fast – but I think if our Kiwi colleagues could do it with six months’ notice and, it’s two years ago now that they’ve managed quite well in their economy without cheques, then I think Aussies could do it in seven years.
Mel Rush: Anna a while ago, Federal Treasurer Jim Chalmers said that direct entry payments, where people pay via BSB and account numbers, that that’s also going to be phased out, so what would replace that?
Anna Bligh: Well, this is a bit complicated, but I’m happy to take you through it. The simplest way to understand it is, right now Australia has two payment systems, there is an older system that is 60 years old that’s known as the direct entry system, and the other one is a New Payments Platform that was built by banks, including the Reserve Bank about five years or four years ago, and it’s that new payments platform that allows you to transfer money in real-time. Basically, the whole system has one leg in one system and one leg in the other. Most of your account-to-account transfers – so if you’re sending money to the BSB of one of your kids or one of your friends because you’re paying for a concert ticket – that’s already happening on the New Payments Platform, you don’t know about it, it’s all happening in the background, but that’s already happening on the new platform. What’s happening on the old platform is some of the big transfers, so payroll payments out of big superannuation accounts, and social security payments, so those very big movements of money that are done regularly, are still sitting on the old platform. So, what the Treasurer has announced is that the old platform will be retired also, and within a period of time, customers won’t see it or feel it at all. People who run those systems like Centrelink and big payroll organisations will have to be making the shift in the background, but as a customer, your ability to use EFTPOS, your ability to transfer funds electronically, that won’t change, you’re just going to be on a different, faster, better set of rails.
Mel Rush: And thank you so much for that explainer, and for being happy to get nerdy with us. I do appreciate it.
Anna Bligh: Well it’s interesting to know what’s happening!
Mel Rush: It really is – I could talk to you more about it. We are coming up to news time, but I appreciate your time on the program Anna thank you so very much. Anna Bligh, there, CEO of the Australian Banking Association.
Australian Banking Association CEO Anna Bligh: Today Australia’s banking system is coming together to launch the most comprehensive set of new anti-scam reforms. With a level of unprecedented cooperation, banks, commercial banks, building societies, credit unions, and mutual banks have joined together to commit to a set of anti-scam reforms to keep Australians and their… Read more »
Australian banks have joined forces to launch a new Scam-Safe Accord to deliver a higher standard of protection for customers and put scammers out of business in Australia. This Accord, between Australia’s community owned banks, building societies, credit unions and commercial banks is a comprehensive set of anti-scam measures across the entire industry. “This Scam-Safe… Read more »
Banks will contribute $19 million over three years to the Government’s voluntary financial counselling model announced today by Minister for Social Services, Amanda Rishworth. “Banks large and small are proud to be funding the lions share of this initiative.” said ABA CEO Anna Bligh. This funding will help increase the availability of free, independent counselling… Read more »