Just when we thought chequebooks and cheque processing was on its way out , we see a unique use case where the traditional banking instrument uses new age disruptive technology such as blockchain to combat cheque fraud.
Cheque fraud accounted for nearly 77% percentage payments fraud in the US alone in a survey conducted in 2015 by AFP . Almost globally the largest revenues impacted in payments fraud are via cheque fraud.
Emirates Islamic, one of the leading Islamic financial institutions in the UAE, announced that it will introduce blockchain technology into its cheques as a fraud prevention measure.
Earlier this year , Emirates NBD had announced the ‘ Cheque Chain’ initiative . There will be a Quick Response (QR) Code on each leaf which enables validation at the source through self service or at the presenting bank . The QR code will be registered on the blockchain so that once the cheque leaf has been presented and cleared under the bank’s ICCS technology , the record will be maintained on the blockchain for auhenticity .
With ‘Cheque Chain’ , Emirates Islamic becomes the first Islamic bank in UAE to undertake this initiative to enhance security in the popular payment method.
Emirates Islamic announced its plan to issue new cheque books carrying a unique QR (Quick Response) code on every leaf, along with a string of 20 random characters to make new cheques being issued compatible on the new platform.
This is an extremely smart move to combat the ever increasing costs of image based clearing and instrument handling coupled with archival and storage of the information . It will be interesting to see how cancelled cheques are handled on the platform and in the long run how the total cost of ownership for institutions span out with blockchain .