Cheque

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Philip Lowe, Governor of the RBA said in a speech on Tuesday that Australia was seeing a further shift away from cash and cheques.
The RBA recently undertook the latest wave of our three-yearly consumer payments survey and cheque use in Australia has been in sharp decline for some time as seen in the graph below.
<img src="https://www.rba.gov.au/speeches/2019/images/sp-gov-2019-12-10-graph07.gif" alt="Graph 7: Cheque Payments per Capita" width="" height="">
They found that over the past year, the number of cheques written has fallen by another 19% and the value of cheques written has fallen by more than 30%, as the real estate industry has continued to shift to electronic property settlements, highlighted in the graph above.
"At some point it will be appropriate to wind up the cheque system, and that point is getting closer," Lowe said.
"Before this happens, though, it is important that alternative payment methods are available for those who rely on cheques.
"Using the NPP infrastructure for new payment solutions is likely to help here."
Lowe said that, as expected, there has been a further trend decline in the use of cash, with cash now accounting for just around a quarter of day-to-day transactions, and most of these are for small-value payments.
"I forecast that this trend will continue," he concluded. 
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RBA boss questions future of cheques for home purchases

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Cheques are so yesterday, and even the hallowed institution, the Reserve Bank of Australia has acknowledged their coming demise.
Paper cheques could perhaps even soon warrant a historical feature alongside the shillings, pence and pounds currency display at the RBA's Martin Place headquarters.
In 1980 cheques made up 85% of all non-cash payments.
Fast-forward to 2016, cheques made up about 1% of the number of non-cash payments, and about 7% of the value of such payments, said the RBA bulletin.
Cheques have long been integral in buying property - both the deposit at the weekend auction, plus the full amount on settlement.
Last year financial institution cheques made up only 9% of the number of cheques written, but accounted for over half of the value of cheques given pricey property acquisitions and related transactions such as the payment of stamp duty. 
The bank produced a chart which shows the issuance of cheques closely correlated with property market transactions. 
These financial institution cheques are also often used for the private sales of cars and are also still used widely for rental bonds. 
Recently, Macquarie Bank announced it was testing a DEFT Auction Pay system that allows buyers to pay their deposit electronically.
The new system allows buyers to do away with the chequebook at auctions when paying a deposit.
Electronic conveyancing is coming too.
The number of settlements transacted is still moderate in the paperless conveyancing scheme, and much relates to refinancing rather than property sales.
The paperless push is lead by GlobalX CEO Peter Maloney who recently noted almost $40 billion worth of property transactions have gone through the platform.
There were around 20,000 PEXA-related property settlements, including refinancing, in the March quarter 2017, some three years into the scheme, Reserve Bank data shows.
This compares with about 120,000 sales transactions in the national housing market in the same period.
The New South Wales government has a commitment to a complete digital property exchange by July 2019, though lawyers and conveyancers are proving to be the biggest roadblock, a recent survey by legal search provider InfoTrack found.
“The results are disappointing and clearly demonstrate that lawyers in the real estate sector must overcome their long-held resistance to new technologies,” says InfoTrack chief executive John Ahern.
The traditional paper-based systems are set to be replaced by the PEXA electronic conveyancing system – currently the only e-conveyancing system available for use in Australia - which appears to has to date failed to attract significant industry support due to concerns over its security, cost and efficiency.
There ought be enormous time and cost efficiencies in moving to digital platforms, however currently entrenched 19th century thinking is costing consumers. 
The NSW Legislative Impact Study indicated that a 13-year uptake period was expected.
This article first appeared in The Daily Telegraph.
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Cheque-ing in on the state of paper property transactions

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ME Head of Home Loans, Patrick Nolan walks through the must-haves to bring along on auction day. “As a quick refresher, when you make the winning bid at auction, you immediately enter into a binding contract. There is no cooling off period, so it pays to have your home loan pre-approved,” says Nolan. “And you’re expected to stump up a deposit – usually 10 percent of the sale price, before you head off to celebrate.
“Sure, you could haul the cash along in a briefcase, but there are easier and safer options to pay on the day.
“The first rule of thumb is to speak with the selling agent. Confirm that you only need a 10% deposit, not more, and enquire about which payment options are acceptable.
Personal cheque
“Personal cheques can certainly be handy at an auction. The beauty here is that you can make the cheque out to the exact figure of the deposit as soon as you make the winning bid. Be sure to confirm if any personal ID is required for personal cheques.
Bank cheque
“Paying by bank cheque is a preferred option among many vendors however the downside is that most financial institutions are closed on weekends or after hours, when most auctions are held. That means arranging your bank cheque in advance with a value of 10% of the highest price you are willing to pay.
“Without knowing the winning bid, your bank cheque could end up being more than a 10% deposit. It’s not the end of the world, it just means the additional cash is now tied up in your new home. The other weak spot is that you’ll pay a fee to have a bank cheque drafted. If you’re unsuccessful at several auctions the cost will start to add up.”
For more information, <a href="https://www.mebank.com.au" target="_blank">click here</a>.
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Cheque

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