In this article I wanted to take a look at changing attitudes to payments and payments technology through a comparison between Australia and the United Kingdom.
In Sydney in early June, we launched our consultation on the future of cheques. Our proposition is simple: based on long-term trends, cheques are steadily disappearing from the Australian community. That means problems down the track for those who rely on them, as they increasingly find their payment counterparties don’t want to use or accept a cheque, even if they do. This consultation is not about cheque clearing at all: it’s about making sure people have what they need.
I am glad to say that a wide range of people have engaged openly and thoughtfully on this knotty issue. Of course there are those who rely on cheques, and don’t like the idea they might have to think about alternatives. But I have been delighted to find that few of them have tried to shoot the messenger – so far at least.
In the same week, on the other side of the world, the House of Lords in London began an acrimonious debate on the same issue: the future of cheques in the UK. The UK Payments Council has had closure of the paper clearing system on the agenda for several years, but they have not been able to win community support for the need to change.
The UK Government is insisting on a paper-based replacement as a condition to allowing closure of cheque clearing. As pointed out by the Opposition, there is an obvious alternative: it’s called a cheque! Once you become a political football like this, I am afraid you are on a slippery slope, and so it has proved. In late-breaking news, the Payments Council has now yielded to community opposition and cancelled the proposed closure of cheque clearing in 2018.
It is always possible that we in Australia suffer down the same path, and end up being drawn into an Australian political debate about closing the cheque system. But I doubt it. There are two key differences. First, Australians love a new thing. We are generally speaking early adopters of new technology, and more likely to think about changing our ways if a reasonable case for doing so is presented. At the risk of offending our British cousins, we are a more adaptable community.
Second, our message is rather different. We are not talking about closing anything. Instead, this consultation is about pointing out and managing a social problem before it becomes serious. Some cynical voices have tended to assume that this is just spin, that we are really about cost cutting. But the simple fact is Australia does not have nearly the same systemic costs of cheque clearing as the UK does. There is no big central hub or processing system for Australian cheques, and nothing now stops a financial institution from marketing ‘no cheque’ accounts to its customers. A few already do this, and our guess is that as cheques continue to decline, more will consider it. The cynical argument doesn’t really stand up to the facts.
The second half of what will inevitably be a long debate is still to come. Once we can all clearly see the problem, we have to find the solution. And of course we have given ourselves time to do this at a pace that suits the community. The second half of the debate is about presenting the simple, cheap and practical alternatives that cheque users can try out. My suspicion is that in many cases, there is already something better out there, it’s just that it needs a bit of thought, or set-up effort, or people haven’t got around to making the change. If for some people there really isn’t an alternative, the consultation should tell us that, and we can help.
I have a lot of faith in the cheerful adaptability of the Australian community. In payments as in other things, quite big changes often happen gradually, informally and without fuss. Chip cards is a payments example: in the last five years we have substantially chipped Australia’s card system, without the ‘big bang’ migration that occurred in the UK and elsewhere. I hope that the migration of paper payments to ubiquitous, cheap and convenient electronic alternatives happens the same way.
