Two new e-payment methods in mid-2025 as S’pore moves to phase out corporate cheques

SINGAPORE - Users of cheques will have two new electronic payment methods from mid-2025 as part of Singapore’s move to gradually phase out corporate cheques.

The two methods will allow deferred payments or post-dated transactions – a key feature of cheques. A post-dated cheque is one that is written with a future date indicated on it and used by businesses in payments.

Individuals and companies can use the upcoming electronic deferred payment system EDP and EDP+ via the digital banking platforms of seven banks. They are DBS Bank, OCBC Bank, UOB, Citibank, HSBC, Maybank and Standard Chartered Bank.

To allow organisations enough time to switch to the new e-payment methods, the deadline to stop processing corporate cheques will be pushed back by another year to the end of December 2026, the Association of Banks in Singapore (ABS) and the Monetary Authority of Singapore (MAS) said on Dec 5.

But there will be no change to the deadline for banks to stop issuing new cheque books to companies by the end of December 2025.

Corporate cheque payees should therefore present their cheques for clearing well before Dec 31, 2026, to ensure that their cheques can be processed before the deadline, said MAS and ABS.

Retail cheques will still be available, as well as cashier’s orders and US dollar cheques for both corporate and retail customers.

Seniors who are aged 60 or older as at end-December 2025 will remain eligible for the waiver of cheque services fees after Dec 31, 2025. The seven banks will do so to provide the seniors with more time to move to e-payments.

The main difference between EDP and EDP+ lies in when funds are deducted from the payer’s account. For EDP, funds are deducted when the payee requests payment, while for EDP+, funds are deducted immediately once they are issued.

MAS and ABS said EDP will address the need for deferred payments – done by way of post-dated cheques today. EDP+ is a variation of EDP that provides greater certainty of payment – like cashier’s orders do now.

The development comes more than a year after MAS announced in July 2023 that all banks will stop issuing new cheque books to corporate customers.

The decision to do away with cheque books and go digital is part of a broader strategy to modernise the nation’s payment landscape and align with the Smart Nation vision. It also comes as the number of users has dwindled over the years. The volume of cheques is estimated to be under nine million in 2024, down from 13.8 million in 2023.

The cost of central cheque clearing has risen to $1 now, up from 10 cents in 2016.

As cheque usage continues to fall, maintaining the current system for processing cheques, known as the cheque truncation system (CTS), has become increasingly expensive.

The banking industry estimates that with the end of corporate cheques, the interbank cheque clearing costs per cheque is set to rise to over $20 by 2031.

Providing the public with retail cheques at a reasonable cost will not be feasible with the current system, MAS said.

From early 2027, the authority plans to introduce a new processing system, CTS Lite, which is less expensive in terms of operating and maintenance costs.

Users will have to deposit their cheques earlier, by noon instead of the current 3.30pm. Funds will also take an additional working day to be made available.

“CTS Lite aims to provide a more targeted solution for processing a much smaller volume of cheques, ensuring that those who still require retail cheques as a payment method can continue to use them at a reasonable cost,” MAS said in its public consultation paper released on Dec 5.

More details of the transition plan from cheques to e-payments can be found in the public consultation paper. Interested parties can submit their feedback by Jan 17, 2025.

When asked, Ms Cassie Ng, OCBC’s head of cash product management, said: “Over the years, we have seen significant reduction in our business banking customers’ usage of cheques.

“We have observed that businesses are increasingly transitioning to alternative e-payment methods, such as PayNow, which we have made as convenient to use and as cost-effective as possible.”

ABS said businesses already have access to a broad range of payment alternatives, including Giro, and PayNow.

It said the expanded suite of payment options will offer businesses greater flexibility and facilitate more transparent transactions.

“While most companies are already adept at using digital payment modes, we recognise that there may be pockets of businesses that do use corporate cheques today. The extension of the cheque processing deadline to December 2026 will give these companies more time to adapt, and the banking industry remains committed to supporting the transition to more efficient, secure and cost-effective digital solutions,” ABS added.