Kenyan banks face a logistic crisis of supplying customers with cheques after dominant banknotes and security printer De La Rue announced plans to freeze local operations from March 31. PHOTO | FILE | NMG
Kenyan banks face a logistic crisis of supplying customers with cheques after
dominant banknotes and security printer De La Rue announced plans to freeze local operations from March 31.The banks are scrambling to seek alternative printers as the lenders advise their customers to stockpile cheques after the multinational made the shock announcement on January 20 to suspend operations on low business.
The moves by the local banks will stoke the debate over the future of cheques as their popularity falls significantly in favour of electronic money transfers, debit and credit cards as well mobile money services like M-Pesa.
Equity Group has asked customers to make bulk orders for chequebooks as they seek a replacement for the multinational that dominates a business that has other players such as Sintel Security, Punchlines Ltd, Ellams Products and Tally Solutions.
The lender has asked its customers to place sufficient orders lasting a minimum of six months as Absa Kenya puts a similar notice on Thursday as its mulls over seeking orders from South Africa.
KCB reckons it will fall back to other vendors in the wake of the freeze notice from the UK security printer.
Digital payments reality
Citi Bank has asked its clients, mainly corporates and wealthy individuals, to make adequate chequebook orders by Tuesday and will cease offering bankers cheques following De La Rue’s move.
“Clients who currently use cheques for their operations are advised to make orders for additional stock as soon as possible and by February 28, 2023, at the latest. We shall unfortunately not be able to process orders received after this date,” said Citi Bank in a notice seen by the Business Daily.
“Citibank will discontinue offering corporate and banker’s cheque issuance services as part of our product portfolio upon the expiry of the acceptance period for the De La Rue printed cheques”
Popular among elderly
But while many businesses have gone slow on accepting cheques, they are still a popular form of payment among elderly people, many of whom fret at using cards or electronic transfers.
In Kenya, the usage of cheques has slowed down in the last decade, losing out to digital payment channels which are more efficient for businesses and individuals.
While the value of cheques went up from KSh2.05 trillion in 2011 to KSh2.55 trillion last year, the number issued in the payments fell from 18.2 million to 15.69 million in the period, says the Central Bank of Kenya.
De La Rue says its Nairobi plant had the capacity to print 60 million cheques in a year. Besides the reduced use of cheques, De La Rue also suffered from a reduced need for new banknotes — its core operation in Kenya.
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