It’s time we consider bouncing cheques from the UAE’s financial system for good

Every year my landlord invites me to his office to discuss the rent renewal for the property we lease from him. The conversation, usually accompanied by coffee, tends to follow a similar path: we have a general catch up about any outstanding maintenance issues at the property and then seek to find agreement on a renewal figure. We’ve been his tenants for a few years now, so thankfully, we are usually able to shake hands on a deal fairly quickly. But the one point of disagreement we always have is over the method of payment. For years I have said that it is better for both him and me if I send him the money electronically, while he says he wants the security of post-dated cheques. So, before I leave his office each year, I end up signing a few post-dated cheques to cover the year ahead. What then happens is the day before each instalment is due, I message the landlord and tell him that I will wire the money to his account. Once the electronic transfer arrives he sends me proof that he has ripped up the cheque. It is an unusual system that operates between us – and one that is, in essence, entirely trust-based – but he gets his wish of the "security" of a cheque and I get the convenience of wiring the money to him. You may wonder, however, why I don’t just go ahead and let the cheque be paid in at the bank instead? But, having previously had my signature queried, I don’t want to run the risk of any future cheque I sign being returned, as that would be far more stressful and time-sapping than the system I currently use with my landlord. I’ve also been on the wrong end of that problem in the past, after paying a cheque into our account from a business. The funds were briefly credited to us and then returned unpaid a few hours later. We only found out why the cheque had been refused after making several trips to our bank branch. It turned out that the problem was caused, you guessed it, by the issuer’s signature being queried and when something like that happens, it takes several days for the unpaid cheque to be returned. Once we had recovered it from the branch, the issuer gave us a new cheque with the right signature on it and the funds belatedly hit our account. But it took more than two weeks to resolve, including many hours of waiting in the bank and several moments of uncertainty to get to that point. Other people tell me they have experienced similar problems when writing or receiving cheques. Could it be time to stop writing them all together? Despite the pandemic prompting a nationwide pivot towards digital and contactless payments and away from cash, we remain strongly attached to cheques in this country. UAE Central Bank data shows that close to 20 million cheques were cleared through the nation’s banks in the first 11 months of 2022. The numbers for the equivalent periods in 2021 are consistent with last year, meaning that cheques are still very much a feature of our daily lives in the UAE, especially if you are buying a car or are living in rented accommodation and need to sign multiple cheques to cover your annual rent. It baffles me as to why cheques still feature so prominently because they seem to offer plenty of guarantees and also no guarantee at all. They are a promise of money without the absolute assurance that funds will find their way to the recipient or that they will do so quickly. More than that, nowadays a signature is less secure and more easily replicated than digital multi-factor security measures. Strides are being made to enable formalised digital direct debit systems for rental and other regular payments. The government has also updated regulations within the past 18 months around bounced cheques and the issuance of cheques without value. Al Etihad Credit Bureau introduced the ChequeScore app last year, which allows users to check if a cheque issued to them is likely to bounce or not, although charges do apply if you want to use the scanning and verification service. According to the bureau, ChequeScore will help raise awareness of the risks associated with cheques, although it is doubtful the app would be able to make a judgement on the worthiness of a signature. All three developments alongside the fact that so many government and municipality services are now enabled for digital payments, suggest the tide may one day turn against cheques. I hope so. Much as I enjoy the annual ritual of a coffee, chat and negotiation at my landlord’s office, I’d be happier still if I could tear up my cheque book once and for all.