Forum: Banks should work towards cutting cost of cheque clearance system

I agree with Mr Paul Chan Poh Hoi’s views on the announcement that Singapore banks will charge a fee to process cheques from Nov 1 (Don’t penalise bank customers for use of cheques, Aug 11).

Apart from the numbers he cited, the figures for the cost of operating the cheque clearance system over the years need scrutiny too.

It was reported that the average cost of clearing a cheque has quadrupled since 2016, to 40 cents in 2021, and that cheque transaction volumes here fell sharply from 61 million in 2016 to fewer than 19 million in 2022.

That would indicate that handling cheques in 2016 cost $6.1 million (at 10 cents apiece) and $7.6 million in 2022 (at a quadrupled cost of 40 cents apiece).

Now that there are fewer cheques to clear, I am not sure if it becomes more expensive to clear each cheque or if the cost is less based on the smaller number. No cost breakdown was given for manpower, system resources and other operating expenses.

The Association of Banks in Singapore (ABS) should not penalise consumers by thrusting its unilateral decision of a cheque processing fee on them.

It is disappointing that the Monetary Authority of Singapore (MAS) seems to have agreed with the ABS move.

I urge MAS to instead direct the ABS to work towards reducing the cost of running the clearance system. MAS should also delay implementing this decision until further studies are done and full information is made available to the public. At the minimum, it should be deferred to 2030 or later. 

Hariharan Gangadharan