Chipping away at the cheque
Scannable "quick response" QR codes could become a lot more useful with banking apps and paper bills offering to short-cut the bill payment process.
Similar to barcodes for retail systems, QR codes can be scanned and read by smartphone apps to capture information and initiate tasks, like launching a website.
Often found on outdoor posters and magazine ads, the scannable matrix code squares will begin appearing on bills from the utilities Australian Power & Gas and Sydney Water, which are among the first billers to use them.
Commonwealth Bank released an updated QR-enabled version of its iPhone Kaching app last week, while NAB quietly updated its iPhone app with QR support earlier this month.
The big-bank-owned joint venture BPay launched QR codes for billers late last year, positioning it as a lure to move customers towards its online and mobile payments system BPay Viewer, from more costly paper-based options such as cash or cheque.
The benefit for bill recipients is that they can use their smartphone apps to scan the code and populate payment methods, such as internet banking pages, with details they would otherwise manually key in. Billers, meanwhile, can cut down on incorrect details that cause payment delays.
Rising support for BPay's QR code comes amid a new plan by the banking and payments sector to meet a Reserve Bank objective to launch Australia's real-time payment and settlement system by 2016. The initiative is being led by the Australian Payments and Clearing Association.
Today, however, cheques have some unique qualities, like the ability to make face-to-face instant exchanges, attach payments with remittance papers and make payments even where little is known about the payee. Cheques are also still widely used to distribute funds from property settlements.
Monthly cheque volumes have fallen from 45 million in 2002 to just 16 million today, according to RBA figures, while BPay transaction values have steadily grown.
But with banking apps, eftpos, online payments including alternatives such as PayPal, support for BPay's QR codes and the real-time payments system, APCA has cautiously predicted Australians will no longer use cheques by 2018.
PCA aims to have real-time payments and the ability to attach data to online payments ready by the end of 2016. It hopes to tackle the addressing challenge by the end of 2017. Whether it achieves this is contingent on the new initiative not crumbling like the last banking joint venture Mambo, Me and My Bank Online identity project that died in 2011.
Ushering out cheques will be great news for merchants and banks, with each cheque costing about $4.20 compared with about 10¢ per transaction, according to a 2007 Reserve Bank study.
So will cash, also costly to process, go the same way?
Frequently Asked Questions about this Article…
Scannable QR (quick response) codes are matrix-code squares—similar to barcodes—that appear on bills and can be read by smartphone banking apps. When you scan a bill's QR code the app can capture the payment details and either populate an internet banking payment page or launch a payment task, saving you from manually keying in biller information.
Several major players are moving to QR-enabled payments: Commonwealth Bank released an updated QR-capable version of its iPhone Kaching app, NAB quietly added QR support to its iPhone app, and the big-bank joint venture BPay launched QR codes for billers. Utility billers such as Australian Power & Gas and Sydney Water are among the first to put QR codes on their bills.
BPay's QR codes and the BPay Viewer let you scan a bill and have the payment details automatically filled into your banking app or online payment screen. That reduces manual entry errors, speeds up bill paying and encourages customers to switch from more costly paper-based options like cash or cheques.
The article notes a strong trend away from cheques: APCA has cautiously predicted Australians may no longer use cheques by 2018 as banking apps, eftpos, PayPal-style online options, BPay QR support and a planned real-time payments system roll out. However, cheques still have unique uses, so disappearance isn't instantaneous and depends on successful rollout of new systems.
Cheques remain useful for a few things: they enable face-to-face instant exchanges, let payers attach remittance papers to payments, work even when little is known about the payee, and are still widely used to distribute funds from property settlements.
Reserve Bank figures cited in the article show monthly cheque volumes dropped from 45 million in 2002 to about 16 million today. At the same time BPay transaction values have steadily grown, indicating strong uptake of electronic bill payment alternatives.
The Australian Payments and Clearing Association (APCA) is leading a banking-and-payments-sector initiative to meet the Reserve Bank's objective for a real-time payment and settlement system. APCA aims to have real-time payments and the ability to attach data ready by the end of 2016 and to address addressing challenges by the end of 2017—although success depends on the initiative avoiding failures like past joint ventures.
A 2007 Reserve Bank study cited in the article estimated each cheque costs about $4.20 to process versus roughly 10¢ per electronic transaction. That large cost gap is why merchants and banks stand to save significantly if cheques are phased out. The article also raises the question of whether cash, another costly payment method, will follow the same path.
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