In this age of technological advancement, cheques have mostly been relegated to the sidelines. Electronic medium of money transfer and the increasing use of plastic cards have made life convenient to bankers and common people alike. However, does this sound the death knell for cheques? The answer is a profound NO. In spite of intense competition, they have managed to safeguard their importance. If you want to know who are the users of cheques in this electronic age, read on to find the answers.
Five top users today:
1. Developing countries
Developing countries in Asia such as India, Sri Lanka, and Pakistan still rely on cheques for their payment usage. The primary reason for this dependence is the poor penetration of internet. Majority of their economy is still agrarian based and infrastructure is very modest. Despite increasing awareness about other mediums of monetary transactions, cheques still play a very prominent role in the economy of these countries.
A majority of governments across the globe rely on cheques to make large payments and hand out social benefits. The bureaucracy in such governments is responsible to handing them out for employment benefits, social welfare and other payments for infrastructure. This makes them one of the largest users in this modern era.
3. Small and Medium Enterprises
SME or Small and Medium Enterprises still prefer cheques for making payments. This is because their financial infrastructure may not be as developed as big global multinational companies. Vendors who provide support for daily operations prefer them as a form of guarantee. SMEs transaction preferences change as a firm grows. But till that transformation occurs, cheques play a pivotal role in their finance.
4. Insurance companies
Except in developed countries, majority of the insurance companies prefer taking premium payments in the form of cheques. They also reimburse their claims via this method. In fact, the insurers make the bulk of primary usage due to sheer number of quantity and volume of transactions. They are also one of the reasons why cheques have not been completely phased out yet.
5. Tax bodies
Regulatory bodies like the income tax departments across the world rely on cheques to make their refunds. While the payment of income tax is now increasingly shifting through the digital medium, cheques are the preferred option for refunding the excess tax paid.
The above five users are the vital factors behind the continued importance of cheques till date. They will ensure that it remains that way for a long time to come.