In recent years, a significant development has occurred in e-commerce transactions, with the development of e-payment methods playing an essential role in sustaining a successful e-commerce market. One of the most prominent forms of digital payment is the electronic cheque which has the same legal effect as a paper cheque. An e-cheque can be further defined as an electronically signed e-mail sent by the cheque issuer to the beneficiary, in order to transfer the cheque value to the beneficiary's account through online banking.
It can therefore be said that e-cheques have the necessary characteristics for e-commerce platforms, and can therefore facilitate global trade through the internet rapidly, since e-cheques do not require a wet ink signature by the cheque issuer to be legal and effective. Furthermore, e-cheques are compatible with the concept that a cheque is a payment method, rather than a credit method, and it is not possible to defraud a bank cheque since the account number can be encrypted.
Recently, the Board of Directors of the Central Bank of Egypt decided to launch a multi-currency electronic cheque clearing system that enables the implementation and settlement of cheques, exchanged between Egyptian banks inside Egypt with foreign currencies.
Historically, these transactions were made through correspondents abroad or through one of the Egyptian banks, which are old mechanisms that are no longer in line with our modern day need for expedited methods for management, settlement, and collection of foreign exchange checks which, in a manner consistent with international standards.
According to the Central Bank, financial transactions made through an electronic clearing system exceeded 2 trillion EGP in 2020.
Despite the decision of the Board of Directors of the Central Bank to activate the electronic clearing system and the significant development this represents, there is still a lack of legislation specific to the governance of electronic payment methods.
To conclude, the aim of this article is to encourage legislators to legalize the status of e-cheques since it increases the capacity and competitiveness of the Egyptian banking systems against international banks, and results in the restoration of confidence in cheques which had, in recent years, lost some of their credibility due to the uncertainty surrounding the availability of the required balance, at the time the cheque is utilized. This in turn should also lead to a reduction in fraud against banks and their beneficiaries.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.