Why do cheques still take so long to clear?

Because the delay is built into the physical nature of the medium. Thats why the solution is to stop using cheques, instead of making it faster.

 

@wylie I used to also work at a bank (80's). I was in a Branch & every day, all day long someone would be inputting cheques as well as the normal deposits & withdrawals. The cheques that came from other banks would get sent out overnight, as you mentioned, but the ones from our own would be input that day. So you would have a 3 day clearance for other banks, and bank cheques would have immediate clearance. Nowadays even bank cheques have the same clearance as other cheques.

I believe it's deliberate, as they want people to stop using them.

 

You can't use the excuse that 'the cheque's in the email', they won't believe you.

 

Because a cheque is nothing but an IOU. It has to be passed to the issuers bank for them to release the funds and communicate that back to the payees bank plus transfer the funds. It used to be done physically with cheque sorting centres in each state physically receiving cheques, sorting them and passing them to the issuers bank branch for verification (signature, funds available) - signature verification still largely needed.

Fun question. What marks a cheque as non-negotiable - The words or the two parallel lines?

Answer - the two parallel lines. The only case I can think of where a mark has more legal weight than words.

 

Fun fact
Signatures are not verified at all if under a certain $ amount. Unless they've changed that since the 80's. If somebody disputed an entry, then they used to pull them out of the archives and check them.

One of my duties at one stage was 'punching' the cheques. Basically data entry. It was very quick, you'd just enter BSB, A/C No & Amount into the computer each morning. Then balance that with what the expected total was.

 

What i want to know is why, in this day and age, anyone is still using cheques.

I think, maybe I know where my chequebook is ... but last time I used it would be 10+ years ago

 

I used to have to do the MICR encoding (just the amount IIRC) when I was in a branch. Then the cheques were left in a pouch for collection and I suppose they were sorted into the different banks to then go to the secret midnight interchange assignation!

The last time I received a cheque I did think damn, have to get this to a branch. That was only 18 months ago.

A few years ago I was talking to a guy from USA and he said the cheque account holder gets the original cheque back which made me go

 

Im old enough remember cheques being common place (although was never old enough to own a cheque book), but even I think how 'crazy' it was to be able to pay a retailer with what is essentially just a paper note IOU.

 

I had cheque books attached to various LOC's. Very handy for paying bills back in the day.

Most retailers did not accept cheques.

 

Fun fact - you don't actually need to write a "cheque" on a bank published cheque. As you said - it's simply in IOU.

A bill of exchange (which is what a cheque is) can be written on anything, as long as it has a date, account number/bsb, amount, name of account, signature and payee name ... napkin anyone?

 

Just as much security as tap & go payments on an unsecured phone.

 

There a lots of reasons. Transaction limits on accounts . When you buy things at clearing sales or auctions cheque are the only practical way to get payment done and done quickly. If you want something done some people only accept cash if you dont have cash they have to take a cheque. Share registeries may need to use cheques if beneficary hasnt update altered details. For tax planning I have my rent paid by cheque so I can reduce tax and delay payment , advantage of lower tax rates. Also so to improve servicing requirements for banks by selecting which financial year income comes in and expense go out. First year of 2 year financials, inome pushed forward ,expenses paid early , 2nd year of financials, expenses pushed foreward , Income credited early. 4 years income weighted towards 2. On year 5 repeat.

 

Our greatest telco sent me cheque about a month ago when I closed one of my accounts .

WTF and a complete PITA.

I had to go to COVID-riddled NSW to bank it .

 

I like cheques to pay the deposit at auctions.

 

I think also that the 3 day delay prevents fraud for owner (drawer) of the cheque. It gives them time to cancel the cheque.

 

A bank will give you a blank cheque over the counter just like that (sound of finger snap).

 

Nab and westpac (?)now have a cheque deposit function on their apps. Take a photo, upload, keep the cheque for 10 days and your good to go.

 

Coronavirus Australia: Banks 'actively' considering end of cheques: RBA

Also

We have removed cheques | ANZ

From 1 June 2021 cheques are no longer accepted for deposit into your ANZ account