Singapore’s Efforts to Eliminate Corporate Paper Checks — Will Results Mirror Other Countries?
- Singapore has set a goal for eliminating use of paper checks
- EDP and EDP+ have recently been launched
- Will other nations follow suit?
Back on July 28, 2023, the Monetary Authority of Singapore (MAS) made an announcement to eliminate corporate cheques (checks) by the end of 2025. This announcement came with an aggressive timeline, which was amended back in December of 2024, where banks would stop issuing new check books to corporates by December 31, 2025 and cease processing of corporate checks on December 31, 2026.
Most recently, PYMNTS reports that the Association of Banks in Singapore (ABS) announced the launch of their Electronic Deferred Payment Solutions -- aka EDP and EDP+.
What is EDP and EDP+?
EDP and EDP+ are two new e-payment solutions that complement existing solutions such as PayNow, FAST, GIRO, and MEPS+. Specifically, EDP and EDP+ can be used to make deferred payments in place of checks. These solutions are available on the digital platform of seven major banks in Singapore:
- Citibank Singapore
- DBS
- HSBC
- Maybank
- OCBC
- Standard Chartered Bank
- UOB
ABS explains how the EDP and EDP+ work:
The solutions allow payers to transfer funds using a mobile number, NRIC/FIN, UEN, or bank account number. Both payer and payee will receive real-time updates on the status of the funds transfer, providing traceability and visibility of when and why a payment was made, from whom and to whom.
The difference between EDP and EDP+:
EDP: Funds are deducted from the payer’s account only when payee requests payment.
EDP+: Funds are deducted immediately from the payer’s account upon issuance of the EDP+, ensuring the amount cannot be used for other transactions.
Comparing Singapore's Effort to Other Countries
The announcement from Singapore is quite similar to Australia's announcement eliminating paper checks. MAS notes that annual check transaction volume has declined by almost 70% from 61 million in 2016 to less than 19 million in 2022. Similarly, the utilization of checks in Australia was quite low, now making up just 0.2% of non-cash payments.
Simply put, the low volumes, less reliance on paper checks AND smaller population makes the transition much easier. Furthermore, MAS and ABS announcements are only for business checks -- but the elimination of personal checks will likely come soon.
When we examine the use case of the United Kingdom (UK) and USA, the elimination is much more difficult.
As noted previously, the US population is over 334M with a GDP of 23.32 trillion (2021); the UK population is 67.33M with a GDP of 3.131 trillion (2021) -- both the US and UK are much larger than Singapore in terms of both population and GDP. Eliminating a payment channel from the US and UK is a more difficult challenge, particularly the US where checks are still utilized for myriad goods and services.
Even while the US Government works to phase out paper check disbursements, we've seen their need to add "exceptions."
While factors do favor countries like Singapore and Australia in their quest to eliminate paper checks, larger countries like the UK and the USA are facing more difficult challenges that will keep checks alive for decades to come.