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Other Articles from The Villager

Cheque phase out scampers financial inclusion

Tue, 29 March 2016 18:37
by Rodney Pienaar
News Flash

Government has queried the directive by the Bank of Namibia and Institute of Bankers Association of Namibia to completely phase out cheque payments by 2017, saying it marginalises other transacting public without access to ICT or E-Commerce.

Minister of Information and Communication Technology, Tjekero Tweya, in an interview with The Villager, said the banking industry’s move on the phasing out of cheques might infringe on the rights of Namibians who do not constantly have access to information technology infrastructure to conduct electronic banking, thus being financially excluded.

This comes after the banking industry started implementing a plan that would see cheque transactions being phased out by 2017 to create convenience to the transacting public. The bulk of commercial banks are already operating with notifications indicating that they will be phasing out cheque payments within a foreseeable time with the complete disengagement expected in 2017. Director of Strategic Communications and Financial Sector Development, Ndangi Katoma told The Villager, that this strategy by BoN is supposed to minimise risks associated with cheque payments as they are prone to fraud and is costly and inefficient.

Early last month, the Banking industry agreed to reduce the limit on cheque payments to N$100 000 from N$500 000. “The Bank of Namibia supported this banking industry decision and issued a determination to this affect. There are various efficient electronic payment mediums in place to facilitate retail payment services other than cheques”, Katoma told The Villager.

However, the Bank says it and the industry players under the auspices of the Payment Associaiton of Namibia (PAN), will ensure that the impact on the general public will be taken into serious consideration before moving forward According to BoN, during the 4th quarter of 2015, cheque volumes and values processed by Namclear continued to decrease compared to the year before (4th quarter of 2014. The cheque volumes and values decreased by 82.5% and 87%, and the Bank said, the continuing downward trend in volume and value is mostly due to the shift to electronic payment and the inefficient nature of cheques as the payment instrument when compared to cards and electronic funds transfer. “The industry continues to enhance and upgrade their infrastructure and technological landscapes to accommodate a growing market and increased demands for services by consumers and businesses”, Katoma said.

He added that this move is not intended to inconvenience the general public, but to try and minimise risks. “Since cheque payments take up to 5 days to clear, this means there is a risk that by day 5 the funds may not be in the account of the person who needs to honour the cheque. This has resulted in a trend amongst Namibian businesses where they no longer accept cheques, as such banking institutions are not initiating new investments in maintaining this infrastructure”, Katoma explained.

There are alternative means of making payments which do not carry the same risks and are faster and cheaper such as electronic funds transfer payments, which can be done through internet banking, at an ATM or in a branch, BoN emphasised. “Electronic payment methods, including new and emerging electronic payment methods, have become eminent means of transacting in an efficient and secure manner, and will continue to form an integral strategic focus area for all stakeholders. Participating groups in the national payments system (NPS), as well as the individual financial institutions have undertaken to enhance service offerings to customers through innovation”, Katoma said