Do QR coded cheques work?

The classes I teach for my PhD students at Altınbaş University are both fun and informative for all of us. Each class, PhD candidates deliver a presentation on different sectors of the economic. These presentations are only a brief summary of studies which help these candidates become entitled to a doctoral degree.

We want candidates to pay utmost attention to the three key following factors:

  • Contribution to science
  • Contribution to community
  • Contribution to humanity

Accordingly, we mostly encourage candidates to focus on case analyses or solution proposals and formulas rather than making assessments in their studies. These solutions offered by the candidates are obviously tested by mathematics, the king of positive sciences. Such efforts eventually lead us to create substantial sets of analysis and data which can be offered to critical decision-makers as a set of solution.

Recently, I reviewed a dissertation by one of our doctoral candidates Ayşegül Karabıyık. Below are listed the outlines of a study investigating the problems in Turkish cheque market and the relevant solution proposals.

Firstly, Karabıyık specifies the following advantages of a regular cheque vis-à-vis other banking instruments such as debit and credit cards, EFT/money order, Direct Debiting System and QR coded cheques: It can be made payable to someone other than the stated payee, it can be given to someone as a guarantee of a conditional payment, it can be used to pay someone who is not a customer of the issuing bank, and it also has other advantages that all bills of exchange do in relation to court dealing with debt or bankruptcy cases. But most importantly, cheques can be written by the drawer for a date in the future just like an EFT/money order, or Direct Debiting System.

Cheque is an instrument that helps boost the economic activities but it may bring some risks as well. For instance, the number of bounced cheques recorded in 2017 was 311.308 while in 2018, this number jumped to over 504.611. And the overall value of these bounced cheques totals to 13.5 billion in 2017, while approaching approximately 25.5 billion in 2018.

The Turkish lira volume to GDP ratio of cheques written by account holders in Turkey has increased by 25-29% over the last decade. Total volume reached 853 billion TRY last year.

While the collection rate of bounced cheques in 2010 was around 65.6%, it appears like this ratio has drastically fallen over the years. The collection rate of bounced cheques in 2018 has declined to 16 percent. Also, the ratio of bounced cheques on a month-to-month basis to total number of written cheques has increased over the last year. Apparently, last year was the worst year ever for everyone. I must however indicate that the collection rate of bounced cheques has been decreasing for the past 10 years.

“Solution lies elsewhere…”

But, do these new QR coded cheques really work? Did they bring any improvement to the cheque market? According to experts and Ms. Karabıyık, they did not. It is suggested that this new practice is a paper cheque-based improvement; therefore it will cause several problems in the system again, in terms of fake cheques scams, and due date tracking. It is even reported that QR coded cheques are reproduced, photocopied, and multiplied, making them readily safe for passing through security undetected. Besides, I was told that the people who write bad checks are still allowed to use their cheque books. These problems indeed need immediate attention. But, don’t you worry; there is a solution to every problem.

Unfortunately, I’m not at liberty to discuss Ms. Karabıyık’s solution proposal here. But I can give you a little hint: She has already found a secure solution which is currently undergoing some tests. I’m happy to see Ms. Karabıyık’s efforts will greatly contribute to the three important aforesaid factors. However, based on all those facts mentioned above, we sadly need to admit that something is wrong. Solution proposals offered so far seems to remain useless. That is the reason why I attach so much importance to M. Karabıyık’s as well as all other doctoral candidates’ efforts ultimately for improving the economy.

I believe Turkey has a bright future ahead as long as they keep up the good work.