Electronic checkbooks may be available in the city by the end of next year, the Hong Kong Economic Journal reported Monday.
All authorized financial institutions will be required to be recipient banks, while medium to large-sized retail lenders are expected to be issuing banks for e-checks, the report said, citing sources.
At present, over 70 percent of written checks are issued through a few major banks. Over 500,000 checks are processed each day, involving a combined HK$1.7 billion (US$219.36 million) in handling costs a year.
Market observers estimate that larger banks will take advantage of the opportunity to launch more person-to-person services. Smaller banks may also seek cooperation with other lenders to compete in the new business.
Bankers said the new payment method can help reduce handling costs, but it will still involve settlement and clearing processes that may prevent e-check recipients from immediately encashing the checks, thus affecting the public’s enthusiasm towards the novel service.
However, corporations and individuals who don’t mind waiting a day for cash, e-checks could be attractive given its security features such as e-signature verification. The new form of payment may also be welcome in cross-border trades, the report said.
– Contact us at [email protected]