KUALA LUMPUR — November 3, 2015: The banking industry should take steps to reduce the cost of handling cash and cheques used for credit card and loan repayments which amounts to about RM2.4 billion annually.
Bank Negara Malaysia deputy governor Datuk Muhammad Ibrahim described this as sheer wastage because a cheaper alternative is readily available.
“Financial institutions must upgrade their management information systems to capture the cost of different payment methods and identify areas with potential for greater operational efficiency.
“They should also foster better coordination between their revenue and cost centres to achieve optimal financial performance,” he said in a keynote address at the ‘Payment System Forum and Exhibition 2015’ here today.
Muhammad told the forum that in 2014, there were 101 million transactions involving both cash and cheques which resulted in higher cost of handling.
From 2011-2013, the handling of cheques declined at a marginal rate of two per cent on average, then eased 10 per cent in 2014 and fell further by 16 per cent in the first nine months of this year.
Bank Negara is projecting the number of cheques cleared to fall from about 207 million transactions in 2010 to 149 million by the year’s end. By 2020 the target would be 100 million cheques which could save a minimum of RM300 million in cost.
For cash, the industry needs to achieve an annual decline rate of 15 per cent per year similar to that of cheques.
“Moving forward, the payment system infrastructure such as the Malaysia Electronic Payment System and MyClear should jointly identify areas for
strategic cooperation to avoid duplication and wastage besides to keep pace with innovation and meet user needs,” said Muhammad. — Bernama