Tony Chukwunyem 
Total value of transactions through cheques across the country amounted to N248.57 billion in July 2021, down 5.72 per cent (N15.09 billion), compared to the N263.66 billion recorded for the previous month, according to data obtained from the Nigeria Interbank Settlement System Plc (NIBSS) and Financial Derivatives Company (FDC).
New Telegraph’s analysis of the data also shows that in the first seven months of this year, the value of cheques cleared by deposit money banks in July is only higher than those of May (N246.62 billion) and April (N243.70 billion).
Further analysis of the data, in fact, revealed that with the exception of April and July, the value of cheque transactions has maintained an upward trajectory this year.
For instance, from N248.21billion in January, the value of cheque transactions rose to N277.45 billion and N317.18 billion in February and March respectively.
Dropping to N243.70 billion in April, it rose to N246.62 billion and N263.66 billion in May and June respectively.
Indeed, apart from when it declined sharply to N103 billion in April 2020, due primarily to the COVID-19-induced shutdown of the economy, the value of cheque transactions maintained an upward trend to hit N283.55 billion in September last year.
While the value of transactions has generally been heading north since the middle of last year, NIBSS’ data actually shows that the transactions have steadily dropped in value in the last five years.
For instance, the value of cheque transactions fell from N441.26 billion in July 2017 to N413.47 billion in July 2018, declining further to N402.81 billion in July 2019 and further plunged to N251.02 billion in July 2020.
Analysts point out that the decline in cheque usage is not peculiar to Nigeria, but a global phenomenon, which is being driven by the widespread adoption of electronic payment channels. Major South African lenders, such as Nedbank, FNB and Absa, last year, announced a discontinuation of cheques from January 2021.
The Payments Association of South Africa (PASA), which said that it anticipates that even more banks will take a similar action, noted that the decline in cheque usage was being exacerbated by the coronavirus outbreak.
It said: “Following COVID-19, the physical contact required to issue, collect and process cheques makes it a less desirable method of payment for consumers and businesses alike.
Since the start of the pandemic in South Africa, there has been a massive decline in cheque usage.” For Nigeria, analysts trace the decline of cheques to 2014, when the Central Bank of Nigeria (CBN), in line with its cashless policy, released a fresh policy on cheque transactions.
The policy placed a ban on payment of value above N10 million through cheques and directed that such payment should be made through electronic payment channels.
Commenting on the sharp decline in cheque usage triggered by the cashless policy, NIBSS predicted in a 2016 report that “we might witness the end of the cheque book by the year 2050.”
It stated: “Globally, as the market share of cheques decline in the wake of increased adoption of contactless and real-time payments, a duopoly may likely develop in the non-cash market with cards and credit transfer (instant payments) dominating across most geographies.
“For instance, in the Asian- Pacific (APAC), China, South Korea and Australia recorded a 20 per cent drop in cheque usage, although India recorded a 10.1 per cent increase in usage due majorly to her government’s demonetisation policy.
“In Nigeria, cheque transactions have continued on a downward spiral from its peak volume of 15.3 million in 2014 to 9 million in 2018. This is a -10 per cent CAGR over the fiveyear period; with a growth rate of -17 per cent when compared to 2017.
Although, the volume of cheque transaction is decreasing, it is fair to say that its use is still relevant, especially amongst larger value transactions, bill payments, and payroll transactions.”
A top official of a Tier 2 bank, who spoke on condition of anonymity, told New Telegraph that although cheque usage is declining in the country, the industry is not expecting cheques to become extinct anytime soon.
The official said: “Although e-payments are growing rapidly, many corporate bodies in this country still prefer to use cheques because they believe that cheques give them some sort of protection from cybercriminals.”
Deposit money banks in the country commenced implementation of the Nigeria Cheque Standard (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS) Version 2, on April 1, 2021
