Singapore: MAS Says Cheque, Please: MAS’s latest update in the SGD Corporate Cheque Phase-out and introduction of EDP and EDP+

The Monetary Authority of Singapore (“MAS”) had previously committed to phasing out corporate cheques, as part of its broader strategy to modernise Singapore’s payment landscape. The MAS’ latest publication contains details on this phase-out and the introduction of alternative payment methods.

The publication will be particularly relevant to banks who offer cheque processing services to clients, as the MAS reiterates its expectations for any phase-out or changes to these services. It will also be relevant to the payments industry in general, as the MAS emphasises the importance of developing cost-effective payment alternatives, including its EDP and EDP+ solutions.

Phase-out of SGD corporate cheques and public education campaign

The MAS has confirmed that SGD corporate cheques will be phased out as follows:

• banks have ceased SGD cheque book issuance to corporates from 1 July 2025;
• all banks will discontinue SGD bulk cheque services by 31 December 2025; and
• corporate cheques will no longer be accepted by all banks from 1 January 2027.

To support this phase-out, the MAS and the banking industry will be launching a comprehensive public communication campaign, and the MAS has set out more detail on that campaign in this publication, including its timing and content.

This detail will be relevant for all banks in the Association of Banks in Singapore (“ABS”), who will be developing and implementing the public communication campaign. Feedback to the MAS emphasised the need for targeted support to certain enterprises and sectors, suggesting that the education campaign may be a burdensome responsibility for those banks involved.

The MAS also reiterated that it expects banks to communicate any changes to cheque processing services and fees clearly to customers and with adequate notice. Banks will therefore need to tread carefully when changing any of their cheque processing services, despite reduced cheque volumes, to ensure they meet MAS’s expectations.

Introduction of EDP/EDP+ solutions

The new Electronic Deferred Payment (“EDP”) and EDP+ solutions will form part of Singapore’s e-payment ecosystem. These will be important new payment types with which the payments sector in Singapore will need to grapple. EDP is designed to replace post-dated cheques, while EDP+ will serve as a digital alternative to cashier’s orders.

Importantly, the MAS has confirmed that all banks that are GIRO participants are eligible to participate in these solutions, so we may see other banks start to offer these payment solutions.

The MAS has emphasised that the design of EDP and EDP+ will address common use cases such as invoice payments, property transactions, insurance premium collections, and policy payouts, in order to encourage their adoption. The MAS also provided a number of clarifications on the legal status of EDP and EDP+. As with other electronic payment modes, EDP and EDP+ do not create any contractual rights or relationships between payer and payee, and banks will not be liable for disputes arising between users.

Transition to CTS Lite for retail cheques

From 2027 onwards, the new Cheque Truncation System Lite (“CTS Lite”) will replace the existing CTS system for SGD and USD retail cheques. The reason for this change is that the current CTS system requires a high fixed operating cost, whereas the MAS anticipates reductions in cheque volumes. The CTS Lite system will be relevant to all retail-facing banks who will continue to offer cheque clearing services to their retail customers.

The MAS has confirmed a number of key features of CTS Lite, as follows:

• CTS Lite will have a new deposit cut-off time of 12:00pm (previously 3:30pm for SGD cheques and 1:00pm for USD cheques).
• Funds from cheques will be available on T+2 (i.e., two business days after deposit) (previously T+1).
• MAS and ABS will provide clear technical specifications to participating banks, and banks will be expected to communicate changes to their customers well ahead of implementation.

Ongoing access to USD cheques and future developments

The MAS has confirmed that users will continue to have access to USD cheques following the phase-out of SGD corporate cheques. The MAS received feedback that USD transfers are costly and there are limited cost-effective alternatives to USD cheques. On this basis, the MAS will collaborate with industry to develop “more cost-efficient digital solutions to facilitate local USD transfers”. So we can expect to see further development in this space in due course.