KUALA LUMPUR (March 28): By 2020, Malaysia's usage of cheques as a payment is expected to decline to 80 million per year, beating Bank Negara Malaysia's initial 100 million target.

"We want to do away with cheques. They are a very expensive form of payment, costing us about RM4 per cheque in clearing, whereas transactions made over the internet only cost about 10 sen," said Bank Negara Governor Tan Sri Muhammad Ibrahim at a press conference today in conjunction with the release of the central bank's 2017 Annual Report.

In 2011 when the Financial Sector Blueprint (2011-2020) was launched, some 205 million cheques were used. Following Bank Negara's push for greater adoption of e-payments, the usage has been on the decline, falling 42% to 120 million in 2017.

But Muhammad said companies have been slower to change.

"Many banks even offer the service for free, so it is a concern that some businesses still prefer to use cheques. I wonder what the reasoning is behind that," he said, pointing to Denmark as an example of where Malaysia ought to be headed.

Denmark ended its cheque clearing system when the usage of cheques was brought down to 0.1 cheques per capita.

"That's likely to save a lot of money for the industry because of the removal of one of the clearing systems. And the banking system does not have to support parallel systems," he said.

He also highlighted Malaysia's debit card (interchange) pricing, describing it as among the cheapest in the world at 0.21% for foreign issued cards and 0.15% for domestic debit cards. Prior to Bank Negara's intervention, the rate was 1.1%.

Compared to its Asean neighbours, Muhammad said Malaysia's rates are about five to eight times lower.

"We are amongst the global low in terms of the interchange rates for debit cards. It is more affordable for merchants to accept debit card as a means of accepting payments," he said.

The central bank is pleased with the progress of e-payments, and will continue to push towards digitisation of the financial industry.

Besides that, Muhammad also highlighted the Interoperable Credit Transfer Framework (ICTF) as an initiative in the push towards e-payments as banks and non-bank financial players would be connected to a single network to ensure seamless and secured mobile payments.

"The ICTF will spur greater competition and innovation, and it will pave the way for higher service levels and superior customer experience while advancing the financial inclusion agenda," he added.