Starting from November 1, a fee ranging from S$0.75 to S$3 (equivalent to US$0.55 to US$2.19) will be levied by several Singaporean banks on every Singapore dollar-denominated cheque. This change is observed across prominent banks such as DBS, UOB, OCBC, Citibank, HSBC, Maybank, and Standard Chartered as per the information available on their websites as of Friday (Oct 20). Additionally, charges will be implemented on US dollar-denominated cheques, with fees commencing from US$0.55 to US$3.
Concessions for Senior Citizens
In a move that aims to smoothen the transition towards digital payments for the elderly, all these banks have chosen to waive the above-mentioned charges for individual patrons aged 60 and above. This concession is set to last until December 31, 2025. DBS particularly highlighted their decision, citing that certain customers might need an extended period to adjust to digital payment systems. Standard Chartered, on the other hand, has conveyed its openness to consider exceptions based on individual circumstances.
Background of the Fee Introduction
The decision to charge both corporate entities and individuals for issuing Singapore dollar-denominated cheques was initially announced in July by the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS). While several banks presently impose charges on corporate cheque issuance, individual patrons had been exempted from such fees.
A surge in cheque-processing expenses as its popularity wanes is at the heart of this decision. The costs associated with clearing a cheque have soared since 2016, moving from S$0.40 to S$0.40 in 2021. With projections indicating this figure could escalate to fall between S$2 and S$6 by 2025, especially if cheque volumes plunge by another 70%, the move seems preemptive.
Most banks have, until now, absorbed the cheque processing costs, but the anticipated cost hikes make it unsustainable for them to continue this practice. Consequently, seven banks have decided to implement these new charges, while others are expected to follow suit by July of the next year.
Charges Extend to Cheque Depositors
In another development, not only the issuers but also the depositors of cheques are slated to face charges in the foreseeable future. While the specifics of these deposit charges are still under wraps for most banks, UOB and Maybank have offered some clarity. Both institutions have assured their customers that cheque deposit fees will be waived for at least the subsequent six months post-Nov 1. This decision coincides with the increasing adoption of alternative payment mechanisms, such as PayNow, by various government agencies and organizations.
Conclusion
As the global trend leans heavily towards digital and cashless transactions, this move by Singaporean banks signifies the country’s intent to be at the forefront of this financial evolution. While the transition might pose challenges for specific demographics, banks seem cognizant of these potential hurdles and are taking steps to mitigate their impact.
Also learn about Singapore Banks Introduce “Money Lock” to Combat Rising Scams.
