It's been a dozen years in the making, but Westminster Savings Credit Union is the first financial institution in Canada to offer all its customers electronic cheque depositing
On April 17 Westminster Savings Credit Union, headquartered in New Westminster, becomes the first financial institution in Canada to offer all its customers the option of depositing cheques via smart phone. The news raises a number of questions, not the least of which is, do people really still use cheques?
The answer is yes. B.C. credit unions alone process 65 million cheques a year, 40 per cent of them issued by the governments of B.C. and Canada. The remainder are issued primarily by individuals, mostly to other individuals or to small-business service providers.
As of April 17, Westminster Savings’ 60,000 members can deposit cheques by simply snapping photos of the front and back of the cheque, then tapping a button on their Apple smart device to deposit the amount directly to their accounts. Two other Canadian credit unions, one in Ontario and one in Saskatchewan, plan to offer the service in May. ING Direct has had a pilot project in place since October 2012, and a wider roll-out among Canadian banks and credit unions is expected over the next year or two.
The second question is, why did it take so long? Financial institutions in Canada and the U.S. launched a concerted effort to take chequing online following the September 11, 2001 terrorist attacks, explains Oscar van der Meer, chief technology and payment officer for Central 1 Credit Union, the trade association representing B.C. credit unions. Those attacks grounded air traffic, halting the processing of all cheques and crippling North American banking.
The Americans solved the problem in 2006-2007, when banks rolled out Check 21, an initiative allowing the electronic transfer of cheques. The Canadian effort ground to a halt in 2008, stalled by regulatory hurdles.
The Canadian Payments Association, which regulates payment processing in Canada, finally ironed out the kinks last fall, issuing the all-clear for “cheque replacement documents,” which allow financial institutions to use a printout of an electronic image in the processing of cheques. The final regulatory hurdle will be overcome this fall when cheque processing can be done entirely with electronic images.
Credit unions were able to move quicker than banks to adopt the change, according to Central 1 spokesperson Art Chamberlain: “Credit unions have often been leaders in these technical areas because we’re a bit smaller so it’s easier for us to move on some of these thing than it is for a big bank to change all of their processes.” He adds that he expects banks to follow soon.
Central 1’s van der Meer explains that the use of paper instruments—cheques and cash—is declining in Canada, but very slowly. He adds that in the Netherlands, where he’s from, “cheques disappeared in 1996.”