Exploring cheque use in New Zealand - September 2017 - Innovation Fund
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Exploring cheque use in New Zealand September 2017
Commissioned by the Westpac NZ Government Innovation Fund Project sponsor: IR Working Group: Dave Gillespie, IR Russell Syme, Westpac Shane Spencer, IR Samantha Latham, IR Mondy Jera, ThinkPlace Tarapuhi Bryers-Brown, ThinkPlace Jim Scully, ThinkPlace Visual Designer:Jess Lunnon, ThinkPlace 2 ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund
Introduction
The use of cheques as a mode of payment in New Zealand
has been decreasing over time, but a number of individuals
and organisations continue to use them. Although cheques
are quickly disappearing from common usage there is still
a persistent “tail” of cheque use that needs addressing.
The problem
As cheque use decreases the cost of processing increases. 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.
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 3Introduction
Exploring cheque use in New Zealand
Westpac NZ Government Innovation Fund commissioned a project to explore
this issue from a human-centred perspective. The aim of the project was to
produce a base of actionable insights that can be used by banks, businesses
and government agencies to ultimately design cheques out of the system. This
project was considered a “phase one”, whereby this report is an aligned set of
insights and frameworks that can be used prior to deeper concept development.
What we discovered in this project is that the innovation is in the nudge – we found that
although there is worry and resistance about changing on the part of both the issuers
and receivers of cheques, that people are ultimately nudge-able and will change given
the opportunity. However, like most complex issues, a one-size-fits-all, ordered solution
isn’t likely to work; multiple, small nudges towards the goal will shift people towards
cheque elimination (unless of course, someone just decides to mandate against their
use and deal with any repercussions).
This exploration was also an design better, client-centred products
unintentional, mini-intervention; some and services, and ultimately replace
ThinkPlace was commissioned
participants reflected on their payment cheques entirely.
to develop some customer
habits after the interview and said
Westpac Innovation brought insights that can be used
they would make a change. Whilst by banks and government
ThinkPlace, IR (the project sponsor),
not intended, it is also not entirely agencies by investigating the
and the Ministry of Justice together
unexpected given that just a glimpse following:
to design a qualitative approach to
into a complex system can in fact be a
understanding the social, economic,
disruption. It also provides confidence
cultural and regional forces behind Why are some people
to designers that intentional, still using cheques?
payment choices.
empathetic nudges will work towards
solving the problem. ThinkPlace conducted a targeted What would the human
literature review and an ethnographic impact be if cheques
Overall, there is a good, quantitative
study that uncovered a range weren’t an option?
sense of the cheque-user landscape.
of ethical nudges and insights
Westpac and IR in particular provided How can we support
that might empower people and
a robust picture of who is using people to not pay
organisations to use other options.
cheques. But less has been explored by cheque?
A working group from IR, Justice and
about why people use cheques despite
ThinkPlace explored some high-level
other payment options being available.
concepts and the group formed some
The Innovation Fund aimed to
recommendations for the Steering
understand the experience of cheques
Group to consider.
so that agencies and banks could
4 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundSummary of the literature
This section provides a glimpse into
how other countries are managing,
or have managed, the transition to
other payment modes. Cheque use
is declining globally due to products
and processes that replace the key
functions for consumers in each
market. However, there are stark
differences in the rate and the type
of change, and the impact on culture.
The following discussion highlights
the support different users needed
to move to other options.
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 5Summary of literature
Exploring cheque use in New Zealand
Cheque usage
Singapore
South Korea
New Zealand
Sweden China
South Africa Britain Canada
Netherlands Germany Australia USA
Eliminated Rarely used Retention but Relatively popular
rapid reduction payment method
Electronic payments have caused this seven percent of accounts that use
General cheque shift. Kiwis are now completing 67 cheques, only use cheques, and
electronic payments for every cheque these accounts are generally used
use in New Zealand written; an increase of almost 400 infrequently for special payments
percent since 2010. Online, facilitated such as savings or trusts.
PaymentsNZ’s research bill payments continue to play a
Demographically, age and locality
shows that the use of cheques significant role in this.
are key indicators of cheque use.
in New Zealand has halved Overall, a large amount of accounts in The number of cheques deposited
between 2013 and 2016 from the country are issuing a small amount and issued increases with age. The
a monthly total of 4.4 million of cheques. The top 100 issuers were frequency of electronic payments in
mostly organisations who make a high rural and urban areas is the same,
cheques to 2.24 million.
number of irregular payments. however, rural accounts use around
15 percent more cheques per year
Organisations are the largest
than urban accounts. On average
acceptors of cheques, especially
rural accounts deposit 4.4 cheques
utilities, government and retail. Of the
per account, and urban accounts
100 highest cheque acceptors, 37
deposit 3.7 cheques per account.
percent of cheques are accepted by
the utilities industry, many of whom
send invoices in the post and get
cheques posted back to them.
Cheques are rarely the only payment
channel used by individuals and
therefore not many people are solely
reliant on cheques. Even amongst
This summary combines data from a wide range cheque users, EFTPOS is the most
of publically available reports. The authors were
limited to literature available in English and Dutch common payment choice. Only
6 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundInland Revenue cheques can evoke a certain
Government cheque sense of critical reflection on a
use in New Zealand Seven percent of IR payments purchase; some use cheques
are cheques. This equates to to avoid making mistakes; and
Government has a significant 911,000 payments made by finally, unreliable or limited
influence on cheque 150,000 customers annually. reception as a barrier to digital
payment, especially where an
behaviour in New Zealand. Most cheque payments to IR come
authorisation needs to be made.
Inland Revenue and Ministry from customers who are regionally
of Justice process the based and over 50 years old.
Ministry of Justice
Eighty-five percent of customers
most cheques followed by
who pay by cheque are over 50,
Department of Internal Affairs, with 70 percent of these payments
Justice fees, such as filing
then Ministry of Business, made by those over 65. fees, require payment to be
attached. This incentivises
Innovation and Employment.
Ninety percent of cheque
cheque use – as it is the only
payments came from
appropriate way to ‘attach’
customers who had a tax
payment.
agent linked to their account
for the same tax type as the The option for sending
payment was for (although reparations and receiving
payment for jury duty by cheque
it is not clear who made the
is still available. Justice tells
payment).
us that juror cheques are
decreasing, with 59 percent of
payments being made by direct
Seventy-seven percent of all credit; a reduction of 65 percent
cheque payments made in 2017 in the number of payments by
were made by individuals, with cheque since 2014. Justice
50 percent of this group being has also observed a significant
self-employed. uptake in direct credit since jury
correspondence in all areas were
A significant 96.5 percent of
updated to include this as an
customers only use one channel
option.
to pay.
IR research has identified
some key motivations for their
customers’ cheque behaviour.
For example, cheques are often
used by small suppliers; people
find the emotional and tactile
experience of cheques satisfying;
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 7Summary of literature
Exploring cheque use in New Zealand
International trends aimed to improve the efficiency
Even with imaging technology, of superannuation transactions
and insights cheques are still becoming by making it compulsory to make
more expensive and harder to contributions electronically.
In the past, cheques have
use. Cheque use declined 20 Furthermore, the property settlements
been the first port of call for percent in 2016 – the largest industry, who have historically
non-cash, non-card payments decrease ever recorded for the facilitated a high amount of cheque
in many countries. However, county. The rate of declining transactions has also focused on
international changes have cheque use dropped by six going digital through e-Conveyancing.
percent after remaining flat in In early 2016, the electronic
seen other options arise
conveyancing system had processed
preceding years, including no
with a general trend towards over $10 billion property sales.
change in 2015.
electronic payments and
Lastly, to ensure that consumers can
debit cards. The rate of effectively and confidentially transact
decline varies considerably is declining across age brackets, but with government online, work has
is still largely concentrated in older also commenced on formulating
mainly due to the maturity
citizens. approaches to manage online digital
of other options available in
The payments industry has put focus identity.
each country.
on a coordinated and collaborative
approach to managing the decline of
United Kingdom
the cheque system by ensuring that
Australia before any decisions are made about
an end date, that replacements match, After lengthy consultation, in
Australia is noted as our most or exceed, the attributes of cheques. 2009, the UK Payments Council
comparable in experience of Emerging innovative solutions are announced that they would be
cheque use and decline. expected to further accelerate the closing the cheque clearings
decline by providing useful alternatives system if adequate alternatives
to cheques.
The Australian digital economy is were developed by 2018.
booming and correspondingly digital Of most significance is the New
payments and cards are displacing Payments Platform (NPP), an industry Reports show “voucher” payment
cash and cheques, partly enabled by initiative that is expected to be systems were being considered which
a high number of point-of-sale (POS) launched later this year (2017). This would operate like cheques without
devices nationwide. Both the value initiative is developing infrastructure the same sort of clearing facility and
and volume of digital payments are for data-rich, versatile and speedy processing as cheques.
increasing. Whereas cheque use is payments where consumers will
Due to public backlash, especially
declining at an accelerating rate. be able to link accounts to easy to
centred around concern for the
remember information such as a phone
The Australian payments industry elderly and charities, the Council
number or email address. Users will
changed to digital cheque clearing cancelled this target in 2011,
be able to provide this PayID to people
in 2015. Images of cheques are concluding that cheques would
or organisations they want to receive
now captured at branches and stay for as long as customers
payments from. One of the services
processing centres to be exchanged needed them. Currently, the decline
that the NPP will enable is BPay’s real-
electronically, cutting the need for of cheques in New Zealand and
time mobile payments.
physical exchange and storage. Australia is much further advanced
The Superannuation industry has than when this issue was considered
Today, cheques are often used for
seen a decrease in cheques due to the in the UK.
larger expenditures and dictated by
SuperStream reforms. These changes
merchant requirements. Cheque use
8 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundEuropean Union The Netherlands
In 2015, 55 percent of UK businesses In the EU, there has been a The Netherlands successfully
were still writing cheques. They are steady decline in the use of eliminated the use of cheques
still relatively widely used today, with cheques since the early 1990s, through an increase in the
nearly a half a billion cheques issued with the arrival of the Euro in processing charges and a
in 2016. Sixty-eight percent of people 1999 speeding up that process. reduction in the supply of free
over 65 still use cheques (in contrast
Today, cheques are rarely used cheques.
to 88 percent of 16 to 34-year-olds who
and are no longer accepted as a
never write them). They are a popular
payment in many EU countries. The Dutch public opinion was
choice in certain situations such as
supportive of the move – electronic
when the payer does not know the
means of payments had been
bank account number of the payee,
introduced several years previously,
or the sort code. There is also a small Across the EU, policies were
with the first means of electronic
number of businesses (especially implemented to discourage
payments introduced into shops in
smaller service providers) who do the use of cheques, due to
1985.
not want to share their bank account their considerable costs and
details and/or to become accredited risks. However, not all of In the EU, Norway and the Netherlands
receivers of direct debits. these policies were equally showed the most rapid adoption of
electronic payments, which during
A legislative change then enabled the successful, and the decline in
the nineties largely replaced cheques
introduction of cheque imaging. The cheque use was not uniform
(and cash) as forms of payment.
Image Clearing System will transform across member states
It can be argued that, apart from
the system by allowing cheques to be
minimal fixed start-up fees, the fact
cleared using a digital image rather
that transaction prices for consumers
than the physical paper, removing In 2012, more than eight cheque are zero in the Netherlands was an
the need for cheques to be physically payments per capita were made, important driver in this development.
moved from bank to bank. This is on average, in France, Cyprus, Fixed fees are sunk costs ex-post
being phased in at the beginning of Malta, Ireland, the United Kingdom that do not vary with usage and thus
October 2017. By late 2018, all the and Portugal. The highest usage have limited behavioural effects, in
UK’s banks and building societies will occurred in France, with around 43 contrast to transaction-based prices
clear all cheques this way. cheque payments per capita in 2012. that significantly affect consumers’
The move is being framed as a path A number of reasons have been given payment decisions.
with more choice, but “nobody has to for this climate including a standard By 2002, banks were no longer
do anything differently if they don’t for putting bank account details on accepting payment by cheque.
want to”. Customers will still write invoices, mature debit card markets,
cheques and physically give them to and standalone paper credits (also
the recipient (by post, at the bank, or in called paper Giros). The paper-
The Netherlands continue to
person). Some banks may also enable based Giro provided an alternative
be ahead of the curve in terms
their customers to pay using a digital to cheques by paying through mail.
image of a cheque through a secure of monetary transactions. In
Bank Giro transfers instruct a bank
app. 2016, almost 30 percent of
to directly transfer funds from one
bank account to another. They transactions took place using
provide more security than cheques mobile phones, with experts
when lost, and are processed more predicting cash and wallets will
efficiently. Bank Giro Transfer, or have completely disappeared
Giro Credit are effective ways for within the next 10 years.
businesses to receive payments from
foreign customers, and have been
digital for over a decade.
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 9Summary of literature
Exploring cheque use in New Zealand
Sweden USA
Between 2010 and 2014 Even though the USA has a large to other payment methods, and
Sweden led the race in cheque appetite for online retail, it is at consumers choosing internet-based
decline with a rate of 98 the top end of the spectrum in bill payment methods.
percent. terms of cheque use. Out of the
18 countries still using cheques, Canada
Sweden is swiftly moving towards the USA accounted for 64
a cashless society, with businesses percent of total cheques issued Although still comparatively
and social institutions such as in 2014. high, cheque use in Canada
churches adopting new ways
is lower than in the USA and
to harness the power of mobile
continues a rapid decline. Fewer
payment. Notably, the Swish
Even millennials continue to cheques are being written but
payment service, developed by
major banks, allows 24/7, real-time
issue and receive cheques in for increasingly higher amounts,
payments between bank accounts. large numbers in the states; mainly due to continued
70 percent issuing cheques commercial cheque use. As a
Another platform that is making
at least once a month, and result, there is strong push to
waves is iZettle. Their small card
14 percent issuing over 30 encourage businesses to move
reader connects to a mobile
cheques per month. from cheques to direct deposit.
device. iZettle gained international
attention when Situation Sthlm,
Cheques continue to be a large
a magazine sold by the homeless Many business-to-business invoices proportion of remote transactions.
or disadvantaged in the streets of still rely on cheques, possible due to Many banks in Canada have enabled
Stockholm, provided their sellers the absence of real-time electronic customers to deposit cheques
with the device, aiming to increase payment systems. remotely using a secure app.
sales by using a trusted payment
portal. In 2004, the USA implemented Check Duplication and fraud are some of
21, a federal law that was designed the issues that are emerging as
to help banks handle more cheques issues particularly associated with
Germany electronically. Nearly all cheques in cheque imaging.
the USA are now cleared electronically.
Germany introduced an Research from the Canadian
Many cheque payments are converted
image-based cheque collection Payments Association demonstrates
into electronic payments through the
procedure in 2007 which made a strong relationship between the
Automated Clearing House including
the process cheaper and more both cheques mailed in (ARC) or decline in cheques and the use of
efficient. presented in person (POP). Automated Funds Transfers (AFTs)
such as electronic direct credit or
The introduction of the debit card Electronic cheques are also becoming direct debit transactions.
and the ban in corporate cheques more utilised. They are marketed as an
(2002) had massive influence with electronic version of a paper cheque,
just 0.4 cheques written per capita in fitting seamlessly into the cheques
2014, leaving only a small number of payment system at the core of many
personal cheques being used. businesses and the banking industry.
They contain the same information and
Many regular payments (like bills) fit within the same legal frameworks
traditionally use direct transfers rather as cheques. Payments are authorised
than cheques, and Überweisungen, by the issuer, for example through a
or pre-printed paper credits that confirmation click.
detail the payee’s account, and the
amount payable. The payer provides The decline of cheque use in the USA
the Überweisungen and invoice at has especially been influenced by a
the bank, and the bank transfers the long-term migration of state benefits
amount to the payee.
10 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundDiscussion
This summary has demonstrated the range of
approaches to managing the decline of cheques
globally. Further research into how other
countries have directly supported older and
rural citizens towards non-cheque payments,
and the short-term impacts on citizens would
provide additional insight into these strategies.
The international experience brings to light some key themes:
• Countries who have been early adopters of non-cash options are
experiencing a smoother transition to eliminating cheques –
New Zealand has a comparatively mature EFTPOS and debit card
culture so is probably in this camp.
• Government ceasing the issuing and receiving of cheques plays a
significant role in the bulk decrease of payments and cultivating a
broader culture change.
• People often stick with cheques because they are the best or only
option. The availability of other non-cash, non-card alternatives
invites people to change. International experience shows that
the key attributes requiring replacement are: real-time transfers
with immediate availability 24/7, the ability to attach data and
documents with payments, and to be able to make payments
without knowing the recipient’s account number.
Two high level approaches have emerged:
Cheque decline management
Leaning on cheque imaging Leaning on cheque replacement
• Like a cheque but not on paper • New ways of paying
• Less change • More change
• Prolonging life of cheques • Cheques less and less attractive
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 11Our approach
Exploring cheque use in New Zealand
Our approach to human-centred exploration
CO CO
E NV E NV
G ER G ER
ER Explore GE ER Explore GE
DIV DIV
Inn
Inn
A current &
future view of
1
ovate
ovate
our customer
experience
2 Eva 4 Eva
lu at e 3 lu at e 5
We spoke in depth with 19 people across The people we talked to lived, ran businesses or
New Zealand to deepen our understanding worked in organisations in the following locations:
of how and why people are still using
cheques. We heard from a range of
individuals and organisations, including Auckland
those who: issue cheques, accept, and/ Waikato
or deposit cheques and one organisation
who has recently stopped writing cheques. Wairoa
Wainuiomata
Participants were initially approached for permission Lower Hutt
to participate by either Westpac, IR or Justice. The Johnsonville
participants were chosen from the respective three Wellington City
databases due to their high cheque usage. A wide- Dunedin
range was sought in order to explore the breadth of
Clutha
experience.
ThinkPlace then contacted the participants to set
up an interview time. We experienced some minimal
The sample was comprised of:
attrition between the initial permission granting over
the phone by the three agencies and the attempts to
schedule an interview (we had three such cases, two Tax agents Rural and Sport club
of which from Councils). and their urban older treasurer
clients persons
We were unable to speak with end-users of Justice
(participants were not approached by Justice).
Another gap is persons with disabilities. Several Accountants Law firms Council
organisations were contacted but none came
forward to participate.
Other businesses (confidential)
12 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundAnalysis
The participant was given a choice whether they We captured field notes during each
wanted a face-to-face interview or would prefer interview, and also captured our initial
a phone interview. For phone conversations, we
thinking on debrief templates after each
emailed an information sheet, consent form and
research kit in advance.
interview. This aided analysis and ensured
nuances from the interviews were not lost.
We conducted semi-structured interviews using a
set of prompting questions and card sorts. We used
two sets of cards to elicit meaningful reflection from The transcripts were then read and re-read thoroughly
the participants. A “payment channel” card set asked along with the field notes and debrief capture sheets.
participants to pick out the payment channels they Then a framework for capturing key insights was created.
use from a wide range of examples. People were then The analysis framework included: significant quotes,
asked to put their choices in a hierarchy of use. what would get the participant to shift payment modes,
The second set was used with customers who what would be good for them, and any new experiences
mainly used cheques for personal payments rather or observations that added to our understanding.
than business. These card sorts asked the people to From there, we were able to extract key patterns and
discuss the payment method they use for a range of salient points. The next section provides the detail of
activities. those insights.
The main reason for the card sorts was just to
get participants talking about how and why they
pay for things – not all participants chose to put
them in hierarchies and not all cards applied to all
interviewees.
With permission, the interviews were audio recorded
and then transcribed verbatim. Participants were
offered a copy of the transcript if they wanted one.
Participants who were not working for government Images
Left: List of the card sort
agencies were provided with a voucher in exchange
Right: Photo of the card sort in action
for their time.
Cheque Credit card PayPal Cash
Internet banking Voucher ATM Banking
EFTPOS One-off online payment
Banking App Direct debit Apple Pay
Automatic payments In person, at the bank
Phone banking Pre-loaded cards Txt
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 13A summary of the reasons the people we
spoke with are writing or receiving cheques.
• Using an outdated payment • School fees
processing system (about to
be upgraded) • Gifts
• The difficulty (or not knowing • Koha
how) to get two signatures for • Perceived as a possible tax
an online payment process workaround
• Fees for other options • Fear of giving bank details
pushing people to cheques for online payments
• Court fees must be paid • Lack of trust that provisional
via cheque tax will be paid properly
• Don’t know how to use online without the paper trail
payments/no digital access/ which shows all the correct
not interested in digital means reference numbers, etc.
• Client demand for using • Paying staff bonuses
them/fear of reprisal to • Paying people who won’t
remove the option accept online payments
• IR deadlines for PAYE and necessitates cheque writing
GST being close together – • When it’s difficult or
having a client’s cheque in impossible to find customer
hand in advance is easier than bank accounts for payments
chasing them down to make
a payment. The payments • No seamless option for
being close together puts too online IR batch payments
much stress on the business
• They like having a paper
to change.
record of when what, why,
• Entrenched business and/or and who they paid
personal processes around
• Because it’s an easy option
cheques (habit)
• Receiving a free cheque book
automatically from the bank
14 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundThe following key insights were derived from
analysis of the conversations. We extracted
the central themes and the salient points.
Insight
The magical window of 10-15 years in the
future when it will be easier for people to In 10 years’ time, I think we’d be in a better
stop writing cheques. position because the new generation will
have taken over all the businesses and stuff,
and they’re much more prepared, sort of, to
For those resistant to, or concerned about, the take that on...
stopping of cheques, they offered up the idea that
Participant WI-01
10 or 15 years into the future would be a better
time to eliminate cheques. These commenters
were concerned about the “older generation” not
being able to transition to online or other payment
channels and an assumption was made that
either they would be retired from their current
Interviewer: What makes you say that,
professional posts or gone altogether (deceased).
waiting 15 years?
The idea that the older generation wouldn’t cope
Because you know everybody like me will
with losing cheques was a strong assumption be gone, and there’ll be, everybody new
throughout the conversations, and thus the will be used to it, or will accept it.
assumption that delaying cheque elimination
would avoid the pain of transition seemed a Participant WI-13
logical solution to them.
HIGH-LEVEL OPPORTUNITY AREA
“Phase out” plans that promote the
message of a supported transition that
leaves no one behind.
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 15Key insights
Exploring cheque use in New Zealand
Insight
There is still fear that providing a bank I know it sounds probably a
account number is unsafe for both direct
little bit funny but, it’s just
debits and credits.
the way I think, and so yeah
that’s what I do, but that’s
For debits, we heard about this lack of trust directly
the only direct debit I’ve got
from citizens, but also from organisations who hear
this from their client base as a reason that they is my household insurance.
use cheques (or other forms of payment that don’t Participant WI-11
involve providing bank details).
Paradoxically, some clients of tax agents felt On the other side, organisations who need to pay
comfortable leaving signed cheques and various people don’t often have bank account details so they
other personal details, but not their bank account. resort to writing cheques. Anecdotally, this is because
There is something specifically about the ability to people are afraid to provide their bank account
remove money from one’s account that seems to numbers rather than a preference for a cheque. For
be the barrier, as opposed to just having personal some organisations we spoke to, hunting down those
details in general. account numbers and putting them into their online
Even more confounding, people pay particular bills systems was just more burdensome than cheque
via cheque or counter payments, and others via writing.
direct debit. When questioned, they were sometimes Some organisations told us there are vendors who still
unsure about their own habits around who and won’t accept direct credit or have trouble with their
why they trust to pay via direct debit. It wasn’t internal accounting systems with direct credits so
always about predictable amounts being paid, they’re forced to pay by cheque.
but that was part of the story (a quarterly, stable
insurance payment versus fluctuating power bills,
for example).
I would have to give them
[accountants] my bank details
basically and for me that would
be a bridge too far in terms of
… but I don’t know from a client’s perspective trust goes. I can sign a cheque
whether there is a perception that they
don’t feel comfortable with IRD just taking
so unless someone forges my
money from my account. Sometimes people signature and stuff.
are a bit funny with that concept.
Participant WI-09
Participant WI-06
16 ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund…yeah they’re [cheques] probably open to fraud
just like anything else, same with direct credit,
someone could send you a new bank account
that’s not technically the company’s bank
account…
Participant WI-14
HIGH-LEVEL OPPORTUNITY AREA
Strengthen messages to consumers and
businesses about the safety of direct
debits and credits. Publish a comparison
of cheques versus direct debits/credits
and their relative safety and accuracy.
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 17Key insights
Exploring cheque use in New Zealand
Insight
People hates fees
It seems that if people can avoid paying fees, they will. While we didn’t fact-check, we heard that some
On principle, some will go out of their way to avoid banks are charging fees that are more expensive
paying even a small fee. While we did not focus on fees than cheques for setting up types of direct credits.
per se, we heard how people felt about them and what This may require further investigation.
they do to avoid them.
Here’s a conversation about potential fees with a
participant who writes cheques out to cash at the bank:
About a counter payment fee:
It’s about, I don’t know how much it is, it’s not
terribly much, 25-cents I think, it’s a matter
of principle to me, I know they put that on
Interviewer: If the bank charged you at the
fairly recently, it used to be that you could just
time to cash a cheque, what would you do?
go and pay anything at the counter and that
“Yeah I’d still use cash, but I’d just see you know was fine, but then all these agencies came in
what’s a cheaper way of getting it out.” and decided they were going to get their cut,
Interviewer: Okay so you might shift if it was because this is probably some of what’s going
like all of a sudden, a big fee or something, you on now, to put people off. So, I thought no I’ve
might start using an ATM instead? got all these cheques, I’m just going to send
a cheque away, so I don’t have to worry about
“No, I’d look for another bank first who wouldn’t that silly little amount.
charge, they’re all down here on Lambton Quay,
I would look for another bank…” Participant WI-11
Participant WI-13
HIGH-LEVEL OPPORTUNITY AREA
The stories we heard about fee avoidance weren’t
necessarily “rational” choices. The participant quoted This issue of avoiding fees probably
above pays a flat $5 monthly bank fee for use of comes as no surprise to the banks.
cheques, and she writes very few cheques, so in fact, However, it seems there may be a role
the 25-cent fee was cheaper, and she was already to play for behavioural economists
paying other bills at the same time at the Paper Plus who can design fee structures that
counter. nudge people away from cheques by
simply communicating the true costs
If there is a fee attached to setting up a process,
of each payment mode in a way that
people will default to using a cheque instead (in spite
helps people make “rational” choices
of cheque fees). Perhaps the “flat fee” model for
and banks could use cheque fees as
cheque usage feels invisible to customers whereas if
a more powerful deterrent.
they are prompted to pay a fee they switch payment
modes without exploring the real costs.
18 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundInsight
HIGH-LEVEL OPPORTUNITY AREA
The ceremony of cheques (and paper)
High-level opportunity area: create clever
alternatives to cheques that still have
We expected to hear more about the romantic side of the ceremony of paper but that have an
using cheques, such as the feel of paper, the ritual of easy digital payment mode for actual
writing them, etc. However, what we heard was more money transfer. This may have particular
around habits, preference, ease, fee avoidance and significance for how things function at
mistrust of other options. marae so could be tested with iwi.
One outlier was a paper-loving participant who
realised at the end of the interview that her worries
weren’t so much about cheque removal. She said,
Insight
If they said, ‘there’s going to be The staunch cheque users admitted
no more post’ and everything they would adapt, but others are worried
had to be emailed to you, and about the impacts on their organisation
you’d never get anything in the
post, I think I’d be more upset There was a noteworthy pattern to the interviews
with some participants who claimed to love the
than if they said, ‘you can’t use of cheques. When prompted whether cheque
write a cheque anymore. elimination would produce a small/medium/large
Participant WI-10
impact on them, even the most ardent cheque fans
admitted the impact would in fact be quite low.
One participant at a government department told
us about using cheques as koha for visiting marae.
Cash would be a good substitute, he said, but the
issue of getting cash to staff who were out in the
Well you know given that in my
field was too risky and difficult. Thus, cheques were case I’ve got my daughter who’s
the best for koha payments. got complete control of those
Older persons we spoke with liked the freedom to be sort of things I’d say, ‘here you
able to write cheques to their grandkids and others
do it’.
as gifts without leaving the home. There was some
Participant WI-04
ceremony attached to handing over the cheque
that was somehow different in nuance to cash (or
probably just easier).
One organisation told us that they pay staff bonuses
by cheques because that creates a more special
feeling than just popping the extra pay into their
accounts.
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 19Key insights
Exploring cheque use in New Zealand
Well, I’d just toddle on, just pay
at the counter and stuff like that,
So I mean if there are other options [through
you know. I wouldn’t have an accountant], I am happy to use them, but we
issue with it. have never been informed of others. We have
just been told to do this, we have the cheque
Participant WI-11 and like okay, it works. So, we have never
queried or questioned.
On the other hand, for some within organisations
Participant WI-08
(who are not necessarily attached to cheques the
way individuals might be) the impact would be bigger
due to the necessary changes in office procedures
and/or fear of customer reprisal should they not be
allowed to accept cheques.
The two sides of the argument suggest there is …but honestly, if they had to go, if the cheques
perhaps more fear from organisations than is had to go, then I would manage. I’m not going
necessary – the die-hard cheque users we spoke to be thinking, I would write into the editor
moaning and groaning that the cheques were
with might not be happy, but they’d find a way.
going or anything
Participant WI-11
Well because we know, we know there’d be a
huge kick up [if we didn’t accept cheques] ...we If we turned off cheques, we’d
get enough of a bad rap as it is, you know it’s
good if everything is good but as soon as you have a queue of [employees] up
make one wee mistake…you know so yeah don’t the stairs to talk to the Board.
want to sort of rock the boat too much, you just
need to get their money without inconveniencing Participant WI-17
people too much.
HIGH-LEVEL OPPORTUNITY AREA
Participant WI-01
Demonstrate clearly to organisations
and businesses that customers may be
mildly annoyed, but are ultimately willing
to change with the right supports and
nudges.
First of all [if cheques were eliminated] there is
nothing I could do, and the other thing is, you
Support organisations with opportunities
know, I’ve got a business to run so I would find for best practice without cheques. Offer
a way. a pool of money for investing in updated
technology.
Participant WI-13
20 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundFramework for thinking
about how to shift away
from cheques
Listening to the reasons behind
cheque usage, we realised there
are those who “can’t” shift easily
or those who “won’t” shift easily
(but will with a nudge).
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 21Those who “can’t” Those who “won’t”
• Lack of digital access entirely
(but will with a nudge)
• Disabilities • Preference for other channels
• Frail elderly • Habit
• Digitally left behind (just didn’t • Easier options available
learn) • Afraid/resistant
• Bound by rules/regulations
(e.g. courts only accepting
cheques, various vendors
requirements)
• Isolated socially, culturally or
geographically
• Low literacy, low understanding
• Can’t pay someone online
when don’t have bank details
The two types require different solutions.
“Can’t” types need “Won’t” types need
support for a transition. cleverly designed nudges.
For example: For example:
• Digital training or non-digital • Remove the option to pay
solutions by cheque
• Just do it for people via family • Make it universally more
support or approved social expensive to pay by cheque
service or private agents
• Promote existing options with
• Social service support for more intent
frail elderly and persons with
• Provide a higher level of
disability if required
confidence that sharing a bank
• Government department and account isn’t tantamount to free
other business commitment to account access
change/streamline procedures
• Make it easy to pay without
giving bank account details
• Design a paper substitute for
time of ceremony or gift-giving
22 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundHēnare Tae
Can’t because it’s difficult to Mix of can’t and won’t
pay other ways due to having because he doesn’t have
frail health, low mobility and online skills, has no time, but
isolation. is also a bit stuck in his ways.
Won’t
Can’t
Can’t because she doesn’t Doesn’t see the need for
always have bank details change and doesn’t want
to pay online. She would if to. He wouldn’t move
it was frictionless. without a good fight.
Suzanne William
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 23Scenarios
Exploring cheque use in New Zealand
The following are some hypothetical, amalgamated scenarios based upon the stories we
heard. These characters can be useful for thinking about client need and for humanising
the issues. The quotes are also hypothetical but represent some of the challenges expressed
by the participants. The scenarios can be plotted on a continuum which helps when
thinking about the solutions they may need based on the “can’t” or “won’t” extremes.
Hēnare Tae
Elderly man Low income Non-digital farmer Lives rurally
Lives rurally No family No internet
Doesn’t trust Doesn’t own No internet
access
direct debits a computer access
No mobile Can’t drive Uses a
phone anymore walker The systems and processes of the
farm are set up for using cheques
Doesn’t own a and he doesn’t have the business
smart phone capability to change confidently
His nearest neighbours Pays bills by posting
look after him by delivering cheques – has flag drop
groceries and taking him at house for postal pick
into town now and again and they come each day I’ve got a system that works for me. I
don’t have time to learn anything new –
I’m a farmer, my time is determined by
the demands on the farm. I find people
I can’t do many things by myself anymore. that I trust to do all my accounts – I can’t
Not being able to pay bills would take be bothered dealing with finances and
away my dignity. I’m already feeling quite money. I have never in my life found the
dependent on a few nice people to help. time to sit in front of a computer.
24 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundSuzanne CFO in a William
medium-sized
organisation Successful small Doesn’t like
business owner to change
Makes a lot of She often can’t pay Has always done Emotional connection
one-off and regular people online because things a certain way to cheques and paper
payments, both online she doesn’t have their processes
and with cheques bank account details
so she finds no other
option but cheque
Doesn’t like emails, Loves the social aspect of
thinks they’re sending letters and going
impersonal into the bank
Until everything is She likes to pay staff
easier online, she will Christmas bonuses with
write cheques cheques to make it feel
more like a gift
Likes the traceability Doesn’t like being told
and control paper what to do – hates
processes enable limited choices
Efficiency is Would like to improve
her main driver efficiency but cheques are
sometimes easier than
a whole system change If my bank took away cheques, I would
within her organisation swap banks. They are legal tender – I will
keep using them and I would complain
to my local MP if they tried to stop them
I really don’t like cheques, but if it’s a altogether. It wouldn’t be fair at all. The
hassle to do it online I won’t bother and government should just wait 10-15 years to
just quickly write out a cheque. eliminate cheques for the next generation
– it would make it easier for everyone.
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 25Frameworks
Exploring cheque use in New Zealand
Initial concept and framework
development Here’s an example of what one group
came up with:
After learning about the insights, the They looked at the reason: Fear of giving bank details
working group came together to test some for online payments. They turned it into the need for
early concepts and frameworks in a half- reassurance and increased trust.
day brainstorming session. This day was Their concept was entitled ‘Assurance of protection’
not designed to be an intensive design
An invitation to change:
experience, but rather a session to develop
ways to think about the issue going forward. • Education about the safety of direct debit
options
• Organisations signing up to and publishing a
To test the process, the group broke code of practice that’s visible to customers
into two and:
• Invitations to change to existing electronic
1. looked at the reasons why people are still platforms – always telling people about them
writing cheques,
Persuasion to change:
2. then thought about what customer need that
• For payments into accounts, ask people,
reason represented, then
do you want to be paid today (direct payment)
3. they developed a high-level concept as a or in two weeks (cheque payment with an
possible solution. exaggerated, intentional delay)?
• Offer a card for payment if they don’t want
The other group then gave their reasons it would not
to give a bank account, but charge a fee for
work in a ‘ritual dissent’ style. They then went back
that card
to the drawing board to strengthen their concept and
• Create alternatives (e.g. pay to a mobile
thought about what style of nudge(s) would help.
phone instead)
The framework for thinking about the nudges
• Non-identifying payments into customer
was initially called “nudge, prod or shove” which account (e.g. generic message on statement
were then turned into three types of nudges with so as not to arouse suspicion by others who
more definition: can see the account – particularly true for
Justice and other complex social events)
Forced to change:
An invitation to change
• All card or other costs go to the individual,
(gentle nudge) many other options are in place
• Must pay/accept payment by these other
Persuasion to change means as we do not use or accept cheques
any more
(the prod, more active nudge)
Both the ‘nudge’ framework and the matrix are useful
Forced to change tools that agencies could use when designing their own
(the shove, making people shift concepts. Ideally, future concepts would be developed
to other modes permanently) and tested with the end users of each agency or bank,
given the wide-range of customer needs and the
special requirements in each department.
26 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundThe working group then decided to think about some
of their concepts for change against a matrix.
Biggest impact
Mandate all payments
Bulk payment to Task from tax agents to be
IR from Tax Agent force electronic
Verify bank account Cheque
with each customer amnesty
phone call program
Direct debit Saying the Industry
Banks stop from 3rd final date Group with
remittance parties to be in public Commerce
processing made easier Commission
Card for
Program of
Easiest payment instead Hardest
communication of having to give
bank details
Education IR to stop Pay to an
accepting alias
post-dated -Facebook
cheques -Email
-Phone Sanctions
with cost
increases
Key
Stop New customers Give incentives
automatic with no cheque when people
An invitation to change
cheque book books log-in
re-issing Persuasion to change
Forced to change
Smallest impact
ThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 27Recommended next steps
Exploring cheque use in New Zealand
Recommended next steps
The working group concluded the brainstorm
session by discussing the recommendations
they would like to take forward.
A re-invigorated focus on Develop champions in each
educating customers government agency
This insight project revealed that Government agencies may require some
customers may not know what is specific changes internally, but will need
available to them, do not understand strategic direction and someone to drive
the safety of online transactions and the initiatives. It was assumed that the
do not understand the expense of Better Public Services Result 10 would
processing cheques. provide the best fit for the strategic
direction and targets, with someone
being the champion who understands the
Exploit and enhance existing insights work and how to coordinate and
communication channels action the nudges.
The working group pointed out Form a benevolent cheque-
that there are already many touch ending industry group
points with customers, but we need
a renewed focus on messaging and The working group recognises the issues
education through those existing for banks if there is not a genuine end
contact moments. date and agreement across the banking
sector. In order to avoid collusion issues,
an industry group or similar could be
Develop a task force to work formed and appeal to the Commerce
with big cheque users Commission with a plan to end cheques
collaboratively.
This is particularly appropriate for Establish a cheque elimination
businesses. The task force would date and then make it public
work more intensively to help design
good solutions for these big cheque
users. The working group suspects The working group agreed that in order
it’s more about habit and minor to initiate the nudges, a genuine end date
tweaks (and education as above) when cheques are to become obsolete
rather than major banking product is critical to success. Otherwise, it will
development. However, the task force simply not be taken seriously. This may
would certainly uncover service or involve investment in public awareness
product gaps in the system from the campaigns to assist with a general
user perspective. culture shift.
28 ThinkPlace in collaboration with the Westpac NZ Government Innovation FundThinkPlace in collaboration with the Westpac NZ Government Innovation Fund 29
You can also read
