15 May 2014
Good decision to remove duty on cheques
The Government’s decision to remove the 5 cents duty on cheques as part of the 2014 Budget is evidence of New Zealand’s rapidly evolving payments systems.
The move reflects New Zealanders’ declining use of cheques. The processes and efforts to collect the ever-decreasing cheque duty are likely to outweigh any taxation income benefits that the government receives, according to Payments NZ.
Cheque use in New Zealand is naturally declining at a very fast rate. In April 2014, 3.78 million cheques were processed, which is a decrease of 23% since April 2013 (4.92 million). This mirrors a world-wide trend, although New Zealand’s natural rate of decline appears comparatively faster.
In 2013, 55 million cheques were processed in New Zealand. Cheques are now the least used form of payment in this country. By comparison, in 2004 192 million cheques were processed.
“It won’t be a surprise to most people that cheques aren’t used as much anymore,” said Payments NZ Chief Executive Steve Wiggins. “New Zealand was quick to adopt electronic payment mechanisms and we make billions of transactions a year through electronic means.”
As New Zealanders migrate to more efficient, convenient and safe electronic payments, the use of cheques is likely to continue its downward trend.
Mr Wiggins said Payments NZ would continue to appropriately manage the natural decline of cheques.
“We are also very aware that some groups of New Zealanders still rely on cheques as a way to make a payment and we will be ensuring these segments will be appropriately catered for.”
New rules and standards produced by Payments NZ will govern incoming solutions for mobile payments, which have just come into effect this week. These new rules and standards are designed to support banks and other providers to bring new electronic payment options to market for their customers.