The use of cheques in Hong Kong may be on the brink of extinction as the Hong Kong Association of Banks (HKAB) contemplates a roadmap for their phase-out due to the burgeoning dominance of electronic payments. Luanne Lim, HKAB Chairwoman and Hong Kong CEO of HSBC, highlighted the significant uptake of electronic payment methods such as PayMe, Faster Payment System (FPS), and popular e-wallets like Alipay and WeChat Pay. Lim emphasized the need to consult the industry and develop a transition roadmap to facilitate the eventual demise of cheques.
The three-year impact of the COVID-19 pandemic has accelerated the shift towards digital payments, contributing to a notable decline in cheque usage. Lim, in her role as HKAB Chairwoman, aims to initiate discussions within a task force to explore possibilities and options for transitioning cheque users to digital payments. While it remains undecided whether cheques will be entirely phased out, concerns persist regarding available alternatives for cheque users.
Cheque transactions in Hong Kong diminished to HK$488.6 billion (US$62.5 billion) in December, reflecting a 13% year-on-year decline. This decrease is attributed to the widespread adoption of the FPS introduced in August 2018, enabling instant, costless transfers, resulting in a 34% drop in cheque usage compared to August 2018. FPS transactions, allowing mobile-based transfers between different banks, reached HK$430.24 billion in December, marking a 39% YoY increase.
Globally, the obsolescence of cheques is underway, with countries like Singapore and Australia setting timelines to phase out their use. While the UK experienced a decline in cheque usage to 150 million leaves in 2021, an 80% drop over a decade, public opposition led to the shelving of plans to abolish cheques by 2018. The UK's experience highlights the delicate balance required in transitioning from traditional to digital payment methods.
Lim also announced plans for the HKAB to organize visits to Southeast Asian countries to foster connections and explore opportunities, with the first trip scheduled for Thailand at the end of the month. Amid economic uncertainties, promoting Hong Kong and building relationships in overseas markets is deemed imperative. The HKAB, having signed a cooperation agreement with the United Arab Emirates in December, also plans to explore opportunities in the Middle East. Additionally, anti-fraud measures, talent training, and fintech development are key elements on the HKAB's development agenda for the year.
By fLEXI tEAM