The downside of the cheque system on Kenya's economy
Opinion
By
Justus Kioko
| Jan 21, 2026
Kenya's value of cheques issued is currently valued at 200m monthly, with the growth pattern having hit a plateau in recent years.
M-Pesa payments, excluding RTGS and Pesalink platform, on the other hand, currently stand at 2600 transactions per second with an average of Sh3 trillion worth of transactions per month. The above indicates a market that’s slowly abandoning the mode of payment.
Despite customer preference and the convenience that comes with digital payments, financial institutions have promoted and protected the cheque system by improving clearing duration.
A typical cheque takes 2 days (transaction plus one day) during which period the funds are neither available to the Payee nor the drawer. Numerous systems and manpower are utilized in the clearing process by both the issuing and receiving banks, and the regulator, too.
Further, the inconvenience and cost of having to courier the cheque from the drawer location to the Payee, then physically avail the cheque to the receiving bank, makes the system undesirable.
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Cheques, too, have had a negative impact on the environment as the same is an end product of tree felling. Frauds and dishonored cases are also undesirable features of the product, as dishonored cheques have continued to rise over time.
Digital payments, on the other side, take a fraction of a second to complete with minimal human intervention, thus the global preferred mode of payment. Audit trail in case of investigation/audit is usually straightforward with digital payments. Real-time execution of digital payments too is the most outstanding feature as the system are up 24 hrs a day, giving consumers the opportunity to transact round the clock.
Globally, the clamor to move to digital payments has gained momentum with countries like Sweden achieving 100% cashless digital payment and eliminating the need to print currencies. Through market practice, cheques ended naturally in Sweden in the early 2000s without formal abolishment. Other countries that phased out cheques from their financial system include Finland in 1993 and New Zealand in 2021.
Closer home, African countries have made deliberate and calculated moves to phase out cheques in a bid to deepen the digital economy, with South Africa leading the park where a 2021 deadline was set by SARB (equivalent of our CBK) to discontinue the mode of payment.
Zambia, on the other hand, has set a June 2026 deadline after which cheques will not be accepted in the financial system.
Kenya, being the continental kingpin in digital economy has made tremendous moves like the adoption of digital payments for all government payments, phasing out cheques as a mode of payment for government bills, adoption of IFMIS, amongst other measures to deepen the digital economy.
However, the country needs to accelerate the measures by phasing out cheques as the benefits outweigh the pain of job losses and other inconveniences that will come with the move.
A practical approach will be to first phase out small denomination cheques i.e. less than 100,000.00, in the short term, but set a midterm timeline to phase out the entire mode from the economy.
This will place the country as the continental leader in digital economy and integration