Cheques have long been a staple of financial transactions in the Maldives, widely used by individuals and corporate customers for both routine and high-value payments. However, recent trends indicate a significant decline in the use of cheques, as digital payment alternatives gain traction across the country. The latest data from the Maldives Monetary Authority (MMA) highlights a sharp decrease in cheque usage, raising questions about whether the Maldives is moving towards a cheque-free society.
According to the “Payments Bulletin 2023” released by the MMA, the total volume of cheques processed in the Maldives dropped by 19% in 2023, from 578,000 in 2022 to 465,000. The decline is mirrored in the value of these transactions, which fell by 19%, from MVR 69.3 billion in 2022 to MVR 55.9 billion in 2023. This trend marks a continuation of the decreasing reliance on cheques, which have seen a reduction of over 70% in usage since 2019.
Several factors are contributing to the declining popularity of cheques in the Maldives. One key reason is the growing availability and convenience of digital payment options. With the launch of the Maldives Instant Payment System (Favara) in August 2023, digital payments have become faster, more accessible, and more reliable. Favara enables instant inter-bank transfers 24/7, providing a level of convenience and immediacy that cheques simply cannot match. The initial success of Favara, which processed over 912,000 transactions worth MVR 2.76 billion within just four months of its launch, underscores the shifting preference towards digital transactions.
Moreover, policy measures and directives implemented by the MMA have played a crucial role in reducing cheque usage. Under its action plan to minimise reliance on cheques, the MMA introduced several initiatives between 2020 and 2021 to promote electronic payment methods. These efforts appear to have borne fruit, as evidenced by the steady decline in cheque transactions in recent years. The introduction of more convenient digital banking services, especially those tailored for corporate customers, is expected to accelerate this trend further.
The data also reveals that while cheque usage remains prevalent among corporate customers, who often use post-dated cheques to guarantee payments, the broader market is steadily moving away from this traditional payment method. The predominance of intra-bank cheque transactions—payments made between customers holding accounts at the same bank—suggests a limited scope for cheques in today’s increasingly digital banking landscape.
The high costs associated with using cheques, both in terms of time and fees, are another factor driving customers towards digital payment solutions. Unlike digital transactions, which are often processed instantly and at lower costs, cheques require more time for clearing and are subject to various fees. In 2023, the number of dishonoured cheques decreased by 26% compared to the previous year, further reflecting the diminishing role of cheques in the financial ecosystem. The most common reasons for dishonoured cheques included insufficient funds, incomplete cheque details, and signature mismatches, which add to the administrative burden of using this payment method.
Despite the rapid decline in cheque usage, there are still segments of the population that rely on cheques, particularly in areas where digital payment infrastructure is less developed or among customers who are less familiar with digital banking technologies. However, the introduction of digital payment solutions like Favara and the continuous expansion of electronic money services are likely to bridge these gaps, providing more inclusive financial services across the Maldives.
Looking ahead, the Maldives seems to be on a clear trajectory towards becoming a cheque-free society. As digital payments become more integrated into everyday life, supported by robust infrastructure and regulatory backing, the relevance of cheques is expected to diminish further. For businesses and individuals alike, this shift represents an opportunity to embrace faster, more secure, and more efficient ways of managing financial transactions. The Maldives Monetary Authority’s efforts to foster innovation and enhance the payment ecosystem will undoubtedly play a key role in driving this transformation.
The decline of cheques in the Maldives is not just a trend but a reflection of a broader move towards a more digital and connected economy. As more people and businesses adopt electronic payment methods, the days of cheques as a mainstream payment option may well be numbered.
