Phil A. McBride: Canada Post's workers might have killed the cheque

And, probably, also their jobs.

By: Phil A. McBride

“The cheque’s in the mail.”

For more than a century, Canadian businesses have been using cheques and the post office to send and receive money across the country and the world. It’s easy: you write a cheque, you put it in the mail, the recipient deposits the cheque at their bank, you wait five business days for it to clear and voila — you’ve got the money.

Except, right now, of course, that’s not happening, due to the ongoing postal strike. In fact, a great number of cheques that are in the mail are stuck there, leaving businesses and Canadians with money stranded in transit. I am increasingly convinced that this strike will be remembered in the future as the death of cheques in Canada, at least as a major medium of business exchange.

The banks won’t miss cheques, if so. Cheques are expensive. In 2015, Scotiabank estimated that the writing and processing of a cheque cost anywhere between $9 and $25. In 2023, approximately 379 million cheques were issued for a combined value of $2.9 trillion dollars. That’s an average value of $7,650.00 per cheque, at an averaged cost of $6.44 billion dollars to the banks and their customers. Very little of that cost is incurred if a payment is made electronically.

But it’s not just the money. Cheques are prone to fraud. Cheques can be counterfeited, signatures can be forged and cheques can be written against accounts that can’t cover the amount they’re issued for. The customer is responsible for sending and receiving them, which means they are prone to loss or interception, which adds further time and cost to an already expensive process.

As a business owner, I happen to agree with the banks: I don’t like cheques. I’m made to wait five business days to access my money, and that’s after I’ve waited for the client to issue the cheque and for the postal service to (once upon a time) deliver it to my office.

Today, all of Canada’s charter banks, as well as most Credit Unions, offer many options for electronic payment. Electronic Funds Transfer (EFT), Interac Electronic Money Transfer (EMT), debit cards, credit cards, even SWIFT wire transfers for international payment. All of these institutions have the ability allow for multiple layers of approval that satisfy corporate accounting, security and reporting requirements. All of these forms of payment are faster, cheaper and more secure than cheques — in most cases, I get access to my money inside 24 hours, rather than waiting for a full week for a cheque to clear.

So why has the cheque endured as long as it has?

Some combination of “If it ain’t broke, don’t fix it” and “It’s always been done this way.”

Businesses are not, at their core, innovative. In order to upend core processes that are, in some cases, decades old, there has to be significant incentive. Sometimes when that incentive can be demonstrated, many businesses will choose the status quo over upsetting the apple cart. As a business owner with my own frustrations with cheques, I’ve often wondered what it was going to take to get Canadian businesses to finally give up using cheques for regular commerce.

I think I might have my answer now, thanks to the the Canadian Union of Postal Workers’ (CUPW) ongoing strike.

During CUPW’s rotating strikes in 2018, about one third of my client base at the time made the move to electronic payment — either by EFT or Interac EMT. Because most people back then were pretty sure that they were going to get legislated back to work, and because the strikes were rotating, there wasn’t as much incentive to make the move away from mailed cheques. I had to either wait until the postal workers decided to deliver the mail that week or drive to my clients’ locations and pick up cheques myself.

I’m part of a group of IT business owners from around southern Ontario that get together regularly to collaborate on things related to our various companies. The possibility of a postal strike was a topic of conversation in late October. We all thought the demands being made by the CUPW were completely off the wall and that there was no way Canada Post was going to acquiesce to them. It was agreed by all of us that there would be a strike and that it wasn’t going to be a short one. Given all the political dysfunction in Ottawa at present, it seemed unlikely that CUPW would be swiftly legislated back to work. Weeks, at least, and more probably months, was our guess for how long a strike would go on.

Today, all but two of my clients have stopped using cheques and have made the move to electronic payment, and those two remaining holdouts are in the process of researching the change. Several non-profit organizations that we service have had to go through the process to make board-level motions to change bylaws to allow the change to occur — something that wouldn’t have happened had there been continued, reliable access to the postal service.

So, in one fell swoop, it seems from my vantage point that the CUPW did what the banks have been trying to do for the last decade: they’ve convinced a staggering number of Canadian business to give up on cheques (and Canada Post) and move into the world of secure, and often instant, electronic payment. If and when the strike is resolved and the postal workers resume service, one of the oldest business verticals Canada Post had all to itself will be gone forever.

Sure, it’s only a buck to mail a cheque, but if we assume that 90 per cent of the cheques issued in 2023 were mailed, that represents hundreds of millions in revenue that, while dwindling slowly over time, will be pretty much gone for good as of the beginning of 2025.

There are other examples of the impact of the CUPW strike on businesses in Canada, but I believe this will be seen as the most impactful. I would even go so far as to suggest that the CEOs of the Big Five Canadian banks should send thank-you cards to the postal union leadership for bringing Canadian business into the 21st century and saving them a few billion dollars. As postal workers ponder what their next career might be, maybe they’ll at least take some comfort in their role in modernizing Canada’s economy.

Phil A. McBride is a friend of The Line and an information technology specialist with over 25 years of experience. He owns readyIT Computing Solutions, a managed I.T. service provider in Guelph which serves clients in Ontario, Alberta and Quebec (including The Line!).

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