The phasing out of cheques by the commercial banks is causing more confusion and can potentially result in more disruptions to micro, small and medium enterprises (MSMEs) in Fiji.
The MSMEs welcome the efficiencies that digital transformation means for their businesses, their customers and their suppliers.
However, the way this phasing out process is being managed, including the lack of widespread consultation with MSMEs, overlaid by the existing challenges faced by MSMEs with current digital payment platforms and processes, indicate that we may not be ready to phase out the cheques, yet.
How and where did this all start?
ACTUALLY, and maybe concerningly, it started quiet simply and not so long ago.
According to the Reserve Bank of Fiji (RBF), the proposal and decision to phase out cheques was first submitted by the Association of Banks in Fiji (ABIF) to RBF in December 2021. It is not clear if the then government endorsed this proposal and decision, brought by the ABIF to the RBF.
According to the RBF, the decision was supported by the last government. It is understood that government impressed on the ABIF to ensure widespread awareness and provide ample time for cheque account holders to adjust.
In September 2022, the ABIF and RBF publicly announced that the cheques will be phased out with the process starting in 2024.
Then six months later, in March 2023, an ABIF press release said that the commercial banks were working on phasing out of cheques as a form of payment from April 2024.
In its December 2023 quarterly review, the RBF mentioned that they will begin the awareness on phasing out of cheques shortly after the onboarding of the mobile network operators.
MSMEs raise their concerns with RBF
In early March 2023, the MSMEs, through the Fiji Micro, Small & Medium Entrepreneurs Community (FMSMEC), concerned about the lack of consultation and awareness on the issue of phasing out of cheques, ignited a discussion that roller-coastered into a series of progressive events.
SMEs on the FMSMEC Viber group shared multiple stories of the absence of nationwide consultation and awareness not only with them, but also with the community groups in rural and maritime areas with whom their business transactions were linked with.
There was also collation of stories of the challenges MSMEs were facing with the current digital payment systems, even when paying large companies.
These discussions and real-life stories seemed to provide the evidence and send out signals that Fiji may not be ready, yet. The spill over of these discussions, perhaps through coconut wireless and screenshots, may have reached those that initially and without consultation, proposed and decided on the phase out of cheques.
On 13th March 2024 the ABIF through a press release, moved the process of phasing out of cheques to 1 July 2024 starting with stopping the issuance of new cheque books. In addition, the ABIF stated that commencing 1 January 2025 all banks will cease processing Customer Cheques.
On the 19th of March 2024, the MSME Community formally sent a written submission to the RBF Governor, highlighting their concerns and challenges.
On the same day, the RBF issued a press release stating “while certain timelines have been set by the ABIF as required in any reform action to be achieved, a consultative approach is being undertaken by all relevant stakeholders in this transition. Therefore, all ABIF member banks are taking the much needed effort to raise awareness with their chequing account customers on the available digital platforms that they can take up as cheques start to phase out. Governor Ali mentioned that the RBF will closely monitor the readiness of commercial banks on the proposed dates for the discontinuation of cheques and will make an assessment within the next few months if the current proposed dates are appropriate.”
On 20th March 20204, the MSME representatives met with the RBF Governor and his team. From what I understand, this was a very positive meeting where concerns and challenges of MSMEs were discussed and support from RBF sort to address them. The MSMEs impressed on RBF that they were not against the initiative but requested better management of the process to phase out the cheques.
Interestingly, on the same day that the MSMEs met the RBF Governor and his team, a major large private company in Fiji wrote to the RBF, expressing its concerns and signalling that Fiji was not ready for the phasing out of the cheques, yet.
Awareness is not consultation
The proposal and decision by ABIF to RBF on the phasing out of cheques seems to have skipped that important process that this Government is strongly advocating for. Consultation.
Consultation with MSMEs and the general public, prior to announcing the proposal and decision by ABIF to RBF, would have establish if we are ready for the phasing out of cheques, yet.
It seems that both organizations have bolted towards raising awareness. They both have issued press releases and made media statements, calling it awareness.
The lack of consultation and genuine nationwide awareness has also resulted in businesses publicly announcing that they will no longer accept cheques as of 1 April 2024. One large company has retracted this announcement after MSMEs, again, raised their concerns.
The Fiji Financial Inclusion Policy (2022-30) does not mention the phasing out of cheques as a national policy priority. However, under Inclusive Finance, the policy highlight, “including women, with the resources they need to make investments and manage unexpected expenses to help them address poverty (SDGs 1 and 5), reduce inequality (SDG 10) and build resilience against the impact of climate change events (SDG 13).”
While I have been informed that the decision to discontinue cheques has been discussed in various stakeholder meetings, it is not clear if the proposal and decision by the ABIF to RBF was officially discussed at in the Financial Inclusion Taskforce or any of its four Working Groups, including the MSME Working Group.
When exactly will cheques not be accepted
This situation reminds me of a former colleague who used the phrase, “you tell me and we both will know”. Simply, we don’t exactly know, yet.
The RBF and ABIF is working with the office of the Attorney General and the Fiji Law Society on the legislative changes needed to properly carry out the transition. Apparently, there are more than 40 legislations that needs to go through parliament for amendments. If and when this will happen, we don’t know, yet. Weather it is a priority of the current Government to push it through parliament and in-line with the dates announced by ABIF? We don’t know, yet.
However, we do know that Bank Cheques will continue to be issued until 1st January 2025 and Bank Cheques that have been issued in accordance with current legislation will be processed. I think this was based on consultation between and among the banks.
For the majority, MSMEs and the public who use Customer Cheques, not so lucky. The awareness from the commercial banks says no more issue of cheque books from 1 July 2024. A very specific example, within this cheque phasing out process, where there was no consultation with MSMEs and public.
The opportunity to modernise
The phasing out of the cheques needs to be looked at from a holistic systems modernization point, that will benefit all Fijians, now and in the long term.
This includes improving internet connectivity, safe use of mobile wallets and address flaws with the current digital payment platforms and processes that MSMEs are currently facing on a daily basis.
A proposals and decisions by ABIF to the RBF to phase out cheques and a Ministry announcing that they will not accept cash for Government services, falls short of a well thought through plan to modernize the financial and banking system that works for all Fijians.
Perhaps let’s learn from the big-time flop e-ticketing case that was only designed and implemented in the name of digital transformation, but only to serve two entities. There was no consultation with the users of the system and no specific system design specifications ensuring sustainability, inclusiveness and opportunity to spin off modernization. It missed the bus because we were not ready, yet.
Neither are we ready, yet, for cashless transactions for Government services. The Prime Minister and the Minister for Finance has made public statements last week that cash will still be accepted. Like the MSMEs, they are not opposed to the idea of cashless but have singled out the lack of consultation and that the public and digital systems is not ready, yet.
The positives and what’s next.
If anything, MSMEs seem to be content that there has been some positive engagement and dialogue with the RBF. The RBF and the Governor has been very supportive in these dialogues and facilitating the discussions between MSME representatives and the commercial banks.
The RBF facilitated a whole day awareness session on the 24th of April 2024 between MSME representatives and the Banks. 45 minutes information session with each Bank, to discuss issues relating to phasing out of the cheques and alternative digital payment platforms.
One thing was very evident from the presentation by all the banks. They all are still working on fine tuning their alternative digital payment platforms. Will they be ready by July when the cheque phase out process starts? We don’t know, yet.
It is anticipated that there will be a national roll out of actual consultations with the larger MSME community and public, particularly those in rural areas. Since the proposal and decision to phase out cheques was first submitted by the ABIF, more responsibility should be placed on ABIF to effectively plan and roll out the consultations and awareness.
Hopefully, this will happen before the cheque phase out commencement in July. This will comply with the widespread awareness, impressed by the Government in 2021 to the ABIF.
While the MSMEs and the public have some consolation that the RBF will closely monitor the readiness of commercial banks on the proposed dates for the discontinuation of cheques, there is also an opportunity for the Government and RBF to monitor the readiness of MSMEs and the public.
Edward Bernard is a regional development consultant specializing in private sector/ MSME development and disaster assessment and recovery. He has completed his Masters in Business Administration from the University of the South Pacific and has more than 20 years of experience working for the United Nations, Fiji Government, University of the South Pacific, Fiji National University and private sector.
