Cheque as payment instrument — trends and evolution in Ghana

cheque bookCheques are the most patronised non cash forms of payment in Ghana, with about 96.8 billion cedis worth of it presented last year. Even though it suffered some credibility issues in the past because of various reasons, subsequent reforms and rules have accounted for its huge usage in the country presently.

A cheque as stated in the Bill of Exchange Act 1961 (Act 55) is a bill of exchange drawn on a banker payable on demand. It is an instruction in writing from an account holder to their bank to pay a specified sum of money to a designated beneficiary. Cheques can be written to any business or person by way of money transfer from one bank account to another.

Currently in Ghana, besides the Standard cheque which takes approximately two days to clear, there is also the Express cheque which clears on the same day, in fact, in four (4) hours. The Express Cheque is a recent phenomenon but a similar service existed through a different process some time back; it was referred to as the special cheque clearing.

In the past, it took as long as one week for one to clear a cheque in Ghana. It even got funnier outside of the Accra-Tema zone and ridiculous if you were outside a regional capital. Aside the delay that came with it, people were using cheques as ploy to delay payments, knowing it would take a long time to clear while others used it to evade payments. They issue cheques knowing they did not have enough funds in their account to support it.

The incidence of ‘bounced’ cheque was therefore common, after all, it was the payee that got embarrassed and disappointed and not the payer. This persisted although it was no secret that issuance of dud cheques was an offence.

The Bank of Ghana stepped up its enforcement of the regulation on dud cheques, with stern warnings posted conspicuously at every bank branch. It was followed by a two-pronged approach. First, the application of fines and strict applications of the sanctions and a significant reform which led to the introduction of the electronic clearing of cheques.

The new automated cheque processing procedure truncates or stops the movement of physical cheques at the deposit bank with only the image of the cheque transmitted through a secure electronic cheque clearing system to the paying bank.

The electronic clearing of cheques, immediately removed the undue delay in clearing of cheques and therefore the safe haven for people who used cheques to dodge payments. Cheque clearing throughout the country has now become a two to three day affair. The automatic fine charged to the account of a payer, in the event of a dud cheque, has placed some checks on payers.

The Central Bank through its wholly owned subsidiary, Ghana Interbank Payment and Settlement Systems (GhIPSS), has also added the Express Cheque clearing, such that if you paid in a third party cheque in the morning, you had value for the cheque by afternoon of the same day. This premium service   means that a cheque is as good as cash or even better.

About 3 billion cedis worth of cheques were cleared by way of express in 2013, but the figure jumped in excess of 400 per cent to over 16.8 billion cedis last year according to a publication by Graphic Business. This is an indication that the general banking public are aware of the options available to them when they want to clear cheques. The option to go for either Standard or Express cheque lies with a customer and it is the customer who must make the request for an Express service which normally would attract an additional fee.

Clearing cheques electronically means that, unlike the past when the cheques were carried physically from bank branches to their individual headquarters and then to the clearing house at the Bank of Ghana, today, every bank branch is supposed to have a small gadget used to scan and capture the image of the cheques and sent electronically to the clearing house hosted by GhIPSS. With the same electronic means, it is verified if the payer has enough funds to support the cheque issued and once that is ascertained, value is given to the cheque and the payee’s account is credited.

Various banks apply different charges to both the Standard and Express cheque clearing. Some banks charge COT for cheque accounts, while others charge customers per each cheque presented and there are other banks which do not charge for Standard cheque presentment due to the volume of float they derive from the customer’s cheque proceeds or other business considerations. It is for you as a customer to go shopping around much the same way you do in the market, and choose which bank best suit your goals and objectives.

Let me spend these last few lines to remind ourselves on how we can make payments by cheque safer and also avoid issuing dud cheque by mistake, because the penalty applies none the less.

* Always remember that there is no haste more important than making mistakes on your cheque leaf, so try to write as legibly as possible, to prevent anything from being altered or added.

  • Carefully complete each section of the cheque to ensure accuracy because any error could cause you undesirable delays, a rejection and possibly a fine.
  • Ensure you write the cheque amount at the very beginning of the blank line, so that, no one puts a figure in the available blank space and defraud you.
  • As much as possible, stop using faint pens so that your signature and other relevant information can be well captured electronically.
  • Always draw line through any open spaces on the cheque leaf and never sign a blank cheque. Also all voided cheques should be destroyed.

Cheques are as good as cash and so secure them as much as you would with your cash and be mindful of people close to you in the office or home, so you do not fall victim to cheque cloning.

Considering the numerous risks associated with carrying cash, cheques remain a better form of payment. This is more so when cheques are now cleared electronically and you can, as a customer, opt for the Express Cheque Clearing.

Thanks to technology, a lot of convenience and better service abounds, you only need to shop around the banks and exercise your right of choice and your consumer power to have the best service.

By Justice Agbemenya

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