Cheque transactions drop to five-year low due to rising digital payments
Bank of Uganda has been reducing the value limits of cheque payments with the view of supporting Ugandans to transition to electronic transactions. PHOTO / FILE
What you need to know:
- Cheque payments have reduced from Shs7.98 trillion to just Shs4.8 trillion in the five years to June 2024
Cheque payments have fallen by almost half in the five years to June 2024 due to increased uptake of digital payments, according to data contained in the latest Bank of Uganda Annual Report.
The report, which highlights several fundamentals both within and outside Bank of Uganda, indicates that during the 12 months to June 2024, the value of cheque transactions declined to Shs4.8 trillion, which was almost Shs3.1 lower than the Shs7.98 trillion in the same period ended June 2019.
The reduction, however, Bank of Uganda noted was “consistent with the interbank cheque value limits that took effect on January 15, 2022” to support electronic payments.
In 2022, Bank of Uganda reduced the cheque payment value limit to Shs10m from Shs20m.
Data further indicates that in the five years to June 2024 whereas the value of cheaque transactions has fallen by almost 39.8 percent, there has been a remarkable surge of 52.6 percent in payments conducted through electronic fund transfers (EFTs).
During the period, Bank of Uganda noted, the value of EFT transactions rose to Shs59.4, an increase of Shs31 trillion from Shs27.91 trillion recorded in the 12 months to June 2019.
EFTs are popular in the movement of money from one account to another. The process is completely electronic.
Bank of Uganda has in the last 10 years heightened pursuit of cashless payments, supported by rapid growth in the electronic payment space.
In its annual report, published early this week, Bank of Uganda indicated that the value of electronic money transactions had significantly increased from Shs192.9 trillion in June 2023 to Shs253.7 trillion, supported by increased usage of mobile money as a payment and money transfer platform, which has encouraged electronic movement of low-value transactions across the money value chain.
For instance, data indicates that low-value transactions averaging Shs36,363 dominated e-payments with over 1.63 billion transactions, which represented 87.9 percent of the total number of transactions conducted in the 12 months to June.
Ugandans have been adopting e-payments, shifting away from paper-based transactions such as cheques and paper money.
During the 12 months to June, Bank of Uganda data indicates there was an increase in the value of all electronic payments, which is an indication of increased adaptation of e-money.
For instance, the volume of debit card transactions increased by 24.1 percent from 8.7 million in June 2023 to 10.8 million, while the value of credit card transactions rose by 7.9 percent from Shs107b to Shs115.5b.
Agent banking, which has been key in expanding the reach of commercial banks and other financial institutions through a shared platform of 23 financial institutions to offer interoperable banking services, registered a 33.6 percent increase in transaction value, rising from Shs12.5 trillion to Shs16.7 trillion. However, the platform recorded a 5.7 percent decrease in the volume of transactions from 8.8 million to 8.3 million.
Bank of Uganda also noted that transactions through the Real Time Gross Settlement, which handles inter-bank large value transfers, increased by 16.7 percent from 1.8 million to 2.1 million transactions.
