Multiple countries around the world have phased out cheque payments as newer modes of digital payment emerged. While India has not phased out cheque payments, data indicates that the volume of cheques used for payments has decreased significantly post COVID-19. They are increasingly used for high value transactions. Cheques, once a widely prevalent method of payment worldwide, have experienced a decline in usage in many countries due to the emergence of digital payment methods and other instruments such as debit and credit cards. Moreover, customers now prefer such convenient and faster modes of payment. Several countries have either completely phased out or significantly reduced the usage of cheques due to the same. However, their status and usage vary significantly by region and country. For instance, the Monetary Authority of Singapore announced that all corporate cheques will be eliminated by end-2025 while individuals will still be able to use cheques for a period after 2025. This move was announced following the decline in cheque transaction volume by almost 70% from 61 million in 2016 to less than 19 million in 2022. Likewise, in Australia, cheques that once accounted for 85% of the number of non-cash payments in 1980 and almost all their value, will be phased out by 2030. According to a 2023 Australian government report, the country witnessed a 90% decrease in cheque usage over the past decade with cheques comprising only 0.2% of non-cash retail payments. Meanwhile, its neighbour, the New Zealand government made a strategic decision to end the use of cheques by the end of 2021. Countries are phasing out cheques following steep decline in its usage In the European Union, following the deployment of the giro system, the usage of cheques became rare. Finland ceased cheque usage in 1993, while Dutch banks stopped accepting cheques in 2001, both within the giro system. Denmark significantly reduced cheque practices by 2017, aligning with the broader trend toward electronic payment methods in the Nordic states. According to a recent report from the Federal Reserve Bank of Atlanta that studied the use of cheques in 20 countries for the period from 2012 to 2021, the United States had the highest share of cheque volume in total volume of cashless payments with 5.1% in 2021. It was followed by France and Canada with 4.1% in 2021. The share in Mexico, India, Italy, and Argentina was between 0.9 to 1.6%. However, in 2012, the same share was as high as 44.4% in India and 17.4% in the US. In terms of the value of cheques, the share in the US dropped from 35.1% to 19.6% while in India, the same dropped from 74.6% in 2012 to 13.3% in 2021. Reserve Bank of India’s analysis observed that cheque-based payment transactions in India declined at a CAGR of 15.4% from 2017 to 2020. Most of the countries considered in the report were close to eliminating the use of cheques, with Germany, Korea, Saudi Arabia, South Africa, and the United Kingdom most successful in reducing the usage of cheques. Volume of CTS transaction grew by 7.7% in 2022-23 The Reserve Bank of India introduced the Cheque Truncation System (CTS) to modernize and streamline the cheque-clearing process in India. CTS makes cheque clearance faster and more efficient by replacing the physical movement of cheques, with the transfer of an electronic image of the cheque for clearing. In contrast to the above-discussed trends, a response in the Parliament revealed that in 2021-22, the total volume of cheques through Cheque Truncation System (CTS) in India grew by 0.4%, and in 2022-23, it grew by 7.7%. In numbers, the volume of transactions involving cheques grew from 6,570.84 lakhs in 2020-21 to 7,109.27 lakhs in 2022-23. For a deeper understanding of the trends, we look at the monthly CTS transactions in the country and compare them with those of other widely used digital transaction modes. For the same, the following data has been used for analysis from Dataful: Volume of CTS transactions dropped because of pandemic The volume of transactions through CTS was 559.9 lakhs in October 2023. For the period from June 2020 to October 2023, the average monthly volume of transactions through CTS was 590.5 lakhs. The highest volume of transactions through this mode was recorded in March 2021 with about 806.6 lakh transactions which dropped to 366.6 lakh transactions, the lowest in this period, in May 2021. It can be observed that the volume of transactions through CTS had grown until the second wave of the COVID-19 pandemic, following which it dropped sharply. Since July 2021, the volume has stayed between 500 to 600 lakhs, except for the spikes in March 2022 and March 2023.