Cheque issuance is gradually becoming outdated, but will it ever go away? The answer is no, for now. But industry statistics show that big ticket payments are fast moving to electronic channels where customers want fast and seamless transactions.
Who wants to issue a cheque when transactions can be completed at the speed of light using the numerous e-payment channels instituted by the Central Bank of Nigeria and co-ordinated by the Nigeria Interbank Settlement system.
The drop in volume and value of cheques issuance followed CBN’s policy which stopped banks from allowing more than N10 million to be drawn on a cheque. It said the aim was to strengthen the e-payment system in the country.
CBN had said: “As a further step in its efforts at enhancing the efficiency of the payment system in the country, the CBN hereby sets a maximum limit on cheque payment at N10 million with effect”.
As at the last count, as cleared cheques dropped to N367 billion in January 2020 alone.
The truth is that transactions are now moving to NIBSS Instant Payment where 111,345 transactions worth N10.29 trillion were recorded in January 2020. The figures were reduced when compared with 126,567 transactions worth N10.73 trillion in the preceding month of December 2019.
The volume and value of transactions further dropped to 109,556 and N9.6 trillion in November which were still higher than 106,512 transactions worth N9.33 trillion in October last year.
Analysis of NIBSS transaction flows showed that larger part of banking transactions are now consummated on the Central Bank Inter-Bank Funds Transfer System (CIFTS) and Real Time Gross Settlement (RTGS) platform.
The RTGS, an automated online payment system allows funds transfer from one bank account to accounts in another bank on the same day under the Nigeria Interbank Settlement System (NIBSS) platform.
The NIBSS Electronic Fund Transfer (NEFT) allows funds to be received after 24 hours and is either initiated from electronics means from customer’ convenience or at the initiating banks’ branch.
Additionally, data from NIBSS on cleared cheques showed that banks cleared 628, 628 cheques worth N367.77 billion in January 2020. According to the payment service company, the transactions were less than 652, 412 transactions worth N391.65 billion achieved in the preceding month. Also, 597,485 cheques worth N344.19 billion were cleared in November and 686,133 cheques worth N371.23 billion were cleared in October 2019, NIBSS data further showed.
Continuing, the CBN said: “To this end, any payment value exceeding N10 million are made through the e-payment mode such as the Central Bank Inter-Bank Funds Transfer System (CIFTS) or Real Time Gross Settlement (RTGS), an automated online payment system which allows the transfer of funds from one bank account to accounts in another bank on the same day.
The maximum limit serves as a risk reduction measure in the clearing and settlement arrangement in line with international best practice. To support this initiative, deposit money banks are implored to properly educate their customers on the implementation procedure.
In the statement informing its customers of the new policy and the way it works, the bank explained that one of the e-payment options available to any customer exceeding N10 million stipulated limit is RTGS.
The bank said in the statement that RTGS is available at any of its bank branches on working days between 8.30am and 1.00pm. Transfer requests received after the cut off time of 1.00pm are processed on the next working day.
