Not yet time to write off UAE cheque payments

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• UAE cheque use is dropping
• ‘Legacy’ method in some sectors
• 99% of payments are digital

Cheque books are on their way out in the UAE, but experts have said there is still some way to go before they are signed off for good.

The number of cheques cleared through the country’s banks has fallen from 26 million in 2019 to just over 20 million for the first 11 months of 2023, according to the latest data from the Central Bank of the UAE.

“It’s dropping off, but we’re in the tail,” Joel Van Dusen, group head of corporate and investment banking at Mashreq Bank, told AGBI.

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The UAE is in the middle of its National Payments Systems Strategy rollout, to improve payment infrastructure and encourage the adoption of electronic methods, including e-cheques.

It forms part of wider plans to shift to a paperless economy, promoting digital payments and reducing physical currency and cheque usage.

Australia announced last year that it plans to end the use of cheques by 2030 as part of reforms to drive digitalisation.

The Monetary Authority of Singapore, meanwhile, declared that all corporate cheques will be eliminated by the end of 2025, although individuals will still be able to use cheques for a period after next year.

In the UAE, Van Dusen said, around 99 percent of payments by companies with Mashreq were made digitally.

However, he said that cheques remained a legacy payment method in certain sectors in the UAE, particularly education providers and the real estate industry.

Mashreq is working with the Dubai Land Department to introduce more digitalisation into the process.

“It’s still such a fundamental thing for people,” Van Dusen said. “You could do maybe automated debits instead of post-dated cheques so it will happen; it’s just going to take time.”

Almost 90 percent of consumers in the UAE used at least one emerging payment in 2022 – such as “wearables”, biometrics, digital wallets and currencies, and QR codes – according to the New Payments Index from Mastercard.

“In my experience, demand for cheques is often borne out of habit,” said Ranojoy K Dutta, head of transactional banking, UAE at HSBC Bank Middle East. “But we know that when customers are offered digital solutions that consider all their needs and their ways of doing business, the transition away from paper processes can be pleasantly straightforward.”