This story was originally published at the end of December 2020
UPDATE: On August 27, ASB became the last of the five major New Zealand banks to stop accepting cheques. All ignored an intense lobbying campaign from community support network Rural Women, which targeted bank CEOs and Government ministers. Rural Women argued banks should hold off dropping cheques until at least 2023, when the Government’s broadband roll-out is set to be complete.
“They listened, they sympathised, but they said ‘It’s the times, it’s too expensive to keep going’,” says South Island board member Sharron Davie-Martin. “It’s a really disappointing outcome.”
The banks argue that only 1-2 percent of customers use cheques, she says, “but those people are using them for a reason”.
“It’s highlighted the need for really good, reliable, affordable fast broadband for all rural homes and businesses.”
As Rural Women predicted, the loss of cheques, combined with the closure of many rural bank branches, has meant some customers having to travel long distances to get to a bank, having to keep large quantities of cash at home to pay bills, or being forced to hand over their finances to someone else – leaving them open to abuse.
There’s also been an impact on some rural SMEs, Davie-Martin says.
“For some owners of small cottage businesses without internet or cell phone reception it’s just got too hard [and they’ve stopped doing business[. Cheques have gone, credit card zip-zap machines have gone. How are you meant to take payment?”
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Banks are accused of discriminating against rural customers by phasing out cheques before the broadband rollout to farms is complete. A Rural Women survey shows one in four families have little or no bank or ATM access, and many still have no internet – but the banks are ripping up their cheques.
Farmers and rural households are being told to switch to internet banking when banks stop accepting cheques this year. Yet thousands still have no access to broadband. Go figure.
In August 2020, Rural Women NZ sent out a survey to members, a survey which garnered the highest response rate that government relations manager Angela McLeod can remember over the two years she’s been in the job.
Her members weren’t getting hot under the collar about health or education, agriculture or the environment. It wasn’t even a survey about firearms – although that survey got the second highest response rate.
It was about cheques. To be precise: the disappearance of cheques.
At Kiwibank, they’ve already gone; at ANZ it’s May 31, at Westpac it’s June, at BNZ it’s July. ASB has announced they are going, but hasn’t yet said when.
The problem is many people in rural areas – people trying to run farms or businesses – are still heavily reliant on their chequebooks to pay their bills
Sixty percent of rural women answering the survey said they were concerned about banks phasing out cheque books. Only 27 percent weren’t.
And despite what banks would have us believe, that’s not because people in rural areas are all too old or techno-phobic to master internet banking. That may be the reason for some people.
But for many people outside towns and cities it’s because they still don’t have decent internet access. Or reliable cellphone coverage.
Some don’t have access to internet at all. Or live and work on remote farms where connecting up is possible but would cost hundreds of dollars a month.
And however much your bank gives you access to training and helplines, if you don’t have decent internet, you can’t do your banking online.
Last month, Rural Women launched a campaign to try to persuade the banks to hold off dropping cheques – at least until 2023, when the Government’s broadband roll-out is set to be complete.
Rural Women will be lobbying Ministers and officials and a letter is ready to go out to the chief executives of all the banks.
“We understand that only a small percentage of bank customers use cheques and that only a small number of payments received by large businesses such as telecommunications and electricity are by cheque,” the letter, signed by South Island board member Sharron Davie-Martin, says. “However, our research indicates that these small percentages are largely made up by those living in rural New Zealand.
“We believe that this movement to a cheque-less, and possibly bank branch-less and cashless New Zealand has come too soon for many. The use of cheques is undergoing a natural reduction and will phase itself out as more New Zealanders find other methods to pay accounts. However, for rural New Zealand we first need access to reliable internet to allow for a seamless transition away from cheques.”
The Government’s own Digital Inclusion Action Plan 2020-2021 backs up Davie-Martin’s concerns about poor or non-existent internet access in many rural areas.
The plan shows one in five New Zealanders lack “at least one of the four elements needed to be digitally included – access, skills, motivation, or trust”.
That includes up to 90,000 rural households and businesses “unable to access broadband at speeds fast enough to effectively work or learn from home”.
The Rural Broadband Initiative is helping. The target is for around 84,000 of the 90,000 internet-deprived households and businesses to receive “improved broadband” – but only by the end of 2023.
There are fishhooks in this otherwise admirable plan: those 6000 rural properties which will still not have decent internet access even when RBI is finished, and the fact the fortunate 84,000 will have to wait up to three years for access.
“I worked from home and the storm took the power out which meant I didn’t have internet or cell coverage. That’s rural New Zealand for you.”
– Angela McLeod
Yet it seems New Zealand’s major banks will stop taking cheques in 2021.
“Cheques will phase themselves out, but it’s too early,” McLeod says. “People are telling us they will struggle without cheques. There are still too many areas with no internet or cell phone coverage.
As if to back up her statement, a couple of days later she sends me an email: “Dear Nikki, So sorry I didn’t get back to you yesterday – I worked from home and the storm took the power out which meant I didn’t have internet or cell coverage. That’s rural NZ for you LOL.”
McLeod says her power goes out regularly, particularly in winter.
Meanwhile Davie-Martin says she was recently charged $190 in penalties by IRD for late payment of her GST because the internet wouldn’t stay connected for long enough to make the payment. “It kept dropping out, so I didn’t get my GST in until the next day.”
McLeod says the Rural Women survey shows people are using cheques to pay bills, buy farm supplies and pay their taxes. Some are writing and receiving up to 100 cheques every quarter.
Using cash leaves rural people vulnerable
Davie-Martin says an unintended consequence of the removal of cheques at the same time as banks closing rural branches, is people are turning to cash to pay bills instead.
“More people are keeping large amounts of cash at home to make payments, particularly those who are a greater distance from ATMs and banks. Vulnerability to unscrupulous opportunists who may be watching is an added stress to rural communities.”
“Fewer than 1 percent of our customers now use cheques regularly.”
So why are banks pulling cheques?
Asked that question, banks focus on the fact that fewer and fewer customers use them.
“Cheque use has been declining by 20 percent year-on-year while customer payments via our digital channels increased almost 8,000 percent from 2015 to 2020,” ANZ spokesman Stefan Herrick says. “Fewer than 1 percent of our customers now use cheques regularly.”
Same at Westpac. “Cheques now represent less than 1 percent of payments and that figure continues to fall,” says Westpac’s general manager of consumer banking Gina Dellabarca.
It’s not just the banks, Angela McLeod says. Inland Revenue, Accident Compensation, NZ Post … none of them accept cheques. Spark is phasing them out.
“We’ve reached the point where it makes sense for us to focus our payment options on the future, not the past,” Westpac’s Dellabarca says.
What few of the banks are saying explicitly is that it’s actually all about cost-saving.
It’s way more expensive for a bank to process a cheque payment than an electronic one. That’s because dealing with cheques is labour-intensive, there are fees banks have to pay each other, and the cheques have to be moved from bank to bank and then stored. On top of that are all the printing costs for the cheques themselves.
A Westpac-NZ Government Innovation Fund report in 2017 suggested the fewer people that use cheques, the more expensive it is for banks.
“As cheque use decreases the cost of processing increases, the report says. “Cheque printers are being impacted by low-level demand, and the technology used to process cheques in New Zealand is expiring. As a result, support of cheques in New Zealand for the diminishing “tail” of users would require investment in new cheque processing technology.”
It seems banks are no longer prepared to wear those costs.
Steve Jurkovich, Kiwibank CEO, told Newsroom in 2019 the decision to be the first NZ bank to stop issuing or accepting cheques was a hard one to make, and was to a large extent to do with not wanting to invest in outdated technology.
“The equipment we use for processing is coming to the end of its life. When we explored work arounds we found [an existing] poor customer experience was only going to worsen with longer timeframes for processing at a higher cost.
“The investment needed to be able to continue to meet regulations was significant. We made the decision not to invest in a shrinking service and outdated technology, instead we’re moving forward and equipping customers for a world that is increasingly digital.”
Still, banks know some customers will find it hard to manage without cheques.
In 2019, ASB’s executive general manager of retail banking Craig Sims told Newsroom: “While cheque usage continues its long-term decline in popularity as a payment method, it is still the most convenient for some ASB customers and that is why we’re continuing to offer cheques as a choice.”
Not for much longer, it seems.
ANZ spokesman Stefan Herrick says: “We understand this move will be difficult for some of our customers. We’ve been in touch with thousands of cheque users since July to let them know what’s happening, the digital payment options available and how we can help them make the change.”
He says ANZ’s internet banking system was set up in the pre-fibre/fast broadband era, so it can be accessed on slower Internet connections.
“Our digital solutions are generally not large pages for browsers to download – just the core functionality needed to view balances, make payments and other functions.”
Herrick says one option for customers with no or unreliable internet is to use phone banking.
Searching around various bank websites reveals this is indeed an option for bill payments, although not one McLeod says has been well-explained to rural customers – if at all.
It could also be very expensive to set up. While the banks Newsroom heard from said phone banking was free, it’s not quite as simple as that. A customer service operator at ASB Bank told us it would cost $5 per payee for the bank to help set up phone banking payments.
McLeod said some farming businesses could have dozens of suppliers, meaning several hundred dollars of set-up fees.
Stefan Herrick pointed in the direction of ANZ’s fees pages, where a bit of searching led to this section:
Set-up of $5 doesn’t sound too bad, until further enquiry revealed ANZ, our largest bank, also charges per payee, if a customer needs help.
“Customers can set up payees themselves on phone banking, and don’t need the internet. It’s only if they ask for staff assistance that they’ll be charged the fee,” Herrick says.
BNZ’s chief customer officer, Paul Carter, says the bank has “alternative solutions for the majority of services that traditionally use cheques and will ensure that by July 2021 everybody who uses cheques has an alternative way to access banking services.”
BNZ also charges $5 a shot for staff to help customers set up or amend a phone payee.
A Westpac spokesman said his bank did charge a fee for services requiring contact centre assistance, such as setting up an automatic payment. “But we waive those fees for customers who have no other option but to do their banking over the phone.”
