The Tribune

By Neil Hartnell

Tribune Business Editor

nhartnell@tribunemedia.net

Proposals to impose maximum limits on the transaction value and over-the-counter cashing of cheques, which would take effect by year-end 2026 at latest, were yesterday described as part of a “happy medium” approach to eliminating this payment mechanism in The Bahamas.

The Central Bank, unveiling the launch of a swift public consultation that will close by end-January 2026, said itself and its Bahamian commercial bank licensees are proposing a $1,000 maximum limit on the value of a cheque that can be cashed over-the-counter at a financial institution. And they are also suggesting that the maximum value of a transaction that can be paid for by a cheque be limited to $10,000.

Both reforms, if they proceed, will take effect “no later” than December 31, 2026. This would mark a major cultural shift, especially for construction workers and other professions accustomed to being paid by cheque and cashing it at a bank to obtain cash proceeds. Pay cheques worth more than $1,000 would, instead, have to be deposited under the new proposals.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, who co-chairs the steering committee overseeing the cheques initiative alongside John Rolle, the Central Bank governor, told Tribune Business that the consultation marks the first step in a more measured approach that, in its initial phase, seeks to “significantly reduce cheque usage” in The Bahamas.

Central Bank data revealed that some $3.8bn worth of cheque transactions, numbering 823.1m, were processed in The Bahamas in 2024, although this represented a decline in volume and value by 14.5 percent and 1.9 percent, respectively. Yesterday’s consultation announcement comes after the Central Bank abandoned its original target of eliminating paper cheque use by year-end 2024.

It said this was because “a compelling fraction” of Bahamians need more time to adjust, and the initial timeline was “deferred” to be “reassessed” in 2026. Mr Bowe yesterday said that while he and others preferred “the big bang” approach of eliminating cheque usage all at once, the committee had opted for a more phased approach to ease the transition for Bahamian consumers, businesses and the wider economy.

“I think there are slightly different views,” the Fidelity Bank (Bahamas) chief revealed. “I think there is a consensus that there’s a benefit certainly to seeing a significant reduction in the usage of cheques.

“There are some, me included, who think that we should go with a big bang approach and eliminate them, but there are others who have reservations in terms of the adaptation of general society and, with a total elimination, is it going to be appropriate and cause more damage to the economy than the benefit of future digital payments?

“This is why you’re seeing a phased approach. It’s the happy medium. There’s a consensus that it [cheque usage] needs to be significantly reduced.” Mr Bowe acknowledged that Bahamian businesses and citizens need to be further educated on the benefits and advantages of using digital payments, and reassured about any concerns they have over costs, functionality and security.

He added that, to achieve this, it was critical that digital payments and their associated technology and infrastructure not be treated “as a profit centre” so that Bahamians realise this mechanism “doesn’t put you at a disadvantage compared to using cheques”.

Asserting that the efficiency and convenience of digital payments will grow once the cost aspect is “rationalised”, Mr Bowe said: “If persons think about the real cost of using cheques, with fraud and persons stealing through that mechanism, it’s probably a lot less than digital mechanisms, which have an audit trail and are based on higher efficiency than cheques.

“But we have to convey that so the average citizen, if they see that, will realise it’s reality and not a sales pitch. The national strategy is to not have this as a combative approach. We’ve had some policymakers take the uninformed position that this is negative for the economy, but we have to give respect to their representations and they are in contact with persons on the ground. The phased approach achieves the same objective; just at a slower pace.”

The Central Bank, in its consultation document, said it is also proposing reforms to multiple Bahamian laws that would “remove references to cheques as a mandatory or singular form of payment, and replace them with flexible, technology-neutral payment provisions” to give persons options as to which method they prefer. The Bills of Exchange Act and Payment Systems Act would also be amended to “phase out statutory treatment of cheques and accommodate substituted digital payment instruments”.

Among the laws that would have to be amended to give effect to these proposals are the Employment Act, Supreme Court Act, Partnership Limited Liability Act, Hotel regulations, Public Trustee Rules, Buildings Regulation Rules, Friendly Societies Act and Parliamentary Elections Act “to modernise payment provisions and enable future innovation”.

The Central Bank, recalling its path to payments system modernisation and the issue of cheque usage, said: “In 2022, the Central Bank engaged an external legal consultant for advice on the implementation of its cheque elimination project. The objective was to effect the elimination of the use of cheques in The Bahamas.

“Subsequently, the Central Bank formed a steering committee of key stakeholders to guide consultation on the process. This led to a revised objective, focused on encouraging a reduction in cheque usage, and deferred timeline of December 2025 when the Bank intended to revisit its policy concerning cheque usage.

“The consultants conducted an analysis of the legal, policy and socio-economic framework impacting the use of cheques in The Bahamas. They reviewed Bahamian legislation and practices governing cheques and negotiable instruments, and also considered the approach taken in several comparable jurisdictions that have implemented legislative frameworks to facilitate the elimination of cheques,” the Central Bank added.

“These jurisdictions included South Africa, Namibia, Canada, New Zealand, the United Kingdom and Barbados. Based on the findings, several recommendations were made for legislative and policy changes required to effect a phased approach to the discontinuance of cheques and to implement substituted forms of payment.”

Besides imposing a maximum limit on the transactions a single cheque can pay for, and for over-the-counter cashing, as a means to “positively contribute towards incentivising reduces use of cheques”, the recommendations also call for greater education of customers by Bahamian commercial banks and the proposed legislative amendments.

“The Central Bank was advised that in order to fully support the validity of its supervised financial institutions’ approach to discontinuing cheque services - not only the provision of, but the processing and payment of cheques - it would be necessary to amend and/or repeal certain legislative provisions which give legal recognition to the cheque as a negotiable instrument, and which mandate it as a singular mandatory form of payment,” the Central Bank added.

Mr Bowe yesterday acknowledged that “there’s always resistance to change”, which often stems from the need for more education, but he added that the experience with both VAT’s arrival and elimination of the one-cent coin showed persons often “under-estimate” the ability and speed at which Bahamian businesses can adapt.

“The objective is to be more open-minded to discontinue cheque usage, but not to do it as a force-feeding exercise and use education,” he added.