In The Line, Phil A. McBride outlines the one palpable achievement of the postal workers’ strike in the likely fatal blow to the use of paper cheques in Canada:
Bank of Montreal sample cheque
For more than a century, Canadian businesses have been using cheques and the post office to send and receive money across the country and the world. It’s easy: you write a cheque, you put it in the mail, the recipient deposits the cheque at their bank, you wait five business days for it to clear and voila — you’ve got the money.
Except, right now, of course, that’s not happening, due to the ongoing postal strike. In fact, a great number of cheques that are in the mail are stuck there, leaving businesses and Canadians with money stranded in transit. I am increasingly convinced that this strike will be remembered in the future as the death of cheques in Canada, at least as a major medium of business exchange.
The banks won’t miss cheques, if so. Cheques are expensive. In 2015, Scotiabank estimated that the writing and processing of a cheque cost anywhere between $9 and $25. In 2023, approximately 379 million cheques were issued for a combined value of $2.9 trillion dollars. That’s an average value of $7,650.00 per cheque, at an averaged cost of $6.44 billion dollars to the banks and their customers. Very little of that cost is incurred if a payment is made electronically.
But it’s not just the money. Cheques are prone to fraud. Cheques can be counterfeited, signatures can be forged and cheques can be written against accounts that can’t cover the amount they’re issued for. The customer is responsible for sending and receiving them, which means they are prone to loss or interception, which adds further time and cost to an already expensive process.
As a business owner, I happen to agree with the banks: I don’t like cheques. I’m made to wait five business days to access my money, and that’s after I’ve waited for the client to issue the cheque and for the postal service to (once upon a time) deliver it to my office.
Today, all of Canada’s charter banks, as well as most Credit Unions, offer many options for electronic payment. Electronic Funds Transfer (EFT), Interac Electronic Money Transfer (EMT), debit cards, credit cards, even SWIFT wire transfers for international payment. All of these institutions have the ability allow for multiple layers of approval that satisfy corporate accounting, security and reporting requirements. All of these forms of payment are faster, cheaper and more secure than cheques — in most cases, I get access to my money inside 24 hours, rather than waiting for a full week for a cheque to clear.
So why has the cheque endured as long as it has?
Some combination of “If it ain’t broke, don’t fix it” and “It’s always been done this way”.
