VIEW SUMMARY
GLOBAL MARKET CRISIS (upcoming)
Dubbed near-future concept from the current global market
It is a situation where the global market is not functioning the way it should/ there is a conflict/ or friction and the normal distribution and free flow (of goods) from producers to consumers is not realized with ease. Imagine this scenario;
1. SMEs struggling and some even closing/ businesses collapsing.
2. Price of goods to the end-user, hiking/ high rate of inflation.
3. Producers having hard time to dispatch/sell their products.
3. Rate of unemployment rising.
4. Many states failing to meet their expenditures due to shrunk revenues, thus, laying-off some of their workers.
5. Economies degenerating, globally.
6. Rise in social problems and crimes.
Here we say that the market is ‘poisoned’. With the facts below,
a) SMEs are the main users of cheques, especially in B-2-B transactions.
b) The rate of decline, in the recent years, (starting from 2009 onwards) has slowed in a great deal.
c) Cheques are still a major means of payment in the above-outlined environment.
We can conclude something;
With the four approaches discussed in the research paper entitled: Stabilizing the global market,
With Scientific, SMEs, General-view and market-design approaches, no doubt that the current situation will aggravate the crisis. Here, I explain in real-life how the approaches will reach this point.
With the advancement in technology, the e-payments will continue to improve (faster, more cost-effective and more efficient) as cheque, not-technologically supported, will continue to be jeopardized. More fraud and risks associated more inefficient, high cost of processing, more time of clearance, among others. This widened gap between the two will make the users (SMEs of course) reach a point of tiresomeness/ revolt. They will now try to fix all their transactions into the new e-systems of which not all will. This will make most of them run into difficulties under cheque's expense, while others will lower their transactions/ trade because not all transactions will be digitized. This is because cheque has a specialty in it that makes it survive the competition. Since SMEs are mostly middlemen, walk out of some will affect the distribution channel.
When the distribution channel is adversely affected, there will be little goods passing to the final user.
There will result a shortage in the side of consumers, hence, prices will escalate since the goods are being bought using the 'highest-bidder' issue whereas in the side of producers, there will be mass production and perhaps, wastage.
Following this is the loss of employment and cases of redundancy as this sector employs over 60% of people, leading to degenerating economies since SME-sector is a major building block of any state economy. This also leads to low trade volumes both locally and internationally and many states are unable to meet their objectives following low revenue collection. I.e. Low custom duties, corporation and P.A.Y.E taxes collected. Practicing extreme austerity measures like cutting salaries and lay-off of civil servants and employing double-taxation to the only surviving businesses by governments as in Euro-zone will only hurt citizens more. And since the market is the heart of all other sectors in economy, these others start crumbling. For instance; little business leads to low savings and shrinking of loan-books in banks, hence, poor bank performance.
When there is little goods enter the distribution channel, little is transported to the market-place and near consumers geographically, poor transport performance. There are few businesses to be insured and the one collapsed have to be indemnified so, insurance companies cry a lot. When businesses collapse and economy is hampered, people lack the purchasing power, so, little is bought.
B. CHEQUE'S DEMISE
And since the market is the heart of all other sectors in economy, they start crumbling for instance; little business leads to low savings and shrinking of loan-books in banks, hence, poor bank performance. When there is little goods enter the distribution channel, little is transported to the market-place and near consumers geographically, poor transport performance. There are few businesses to be insured and the one collapsed have to be indemnified so, insurance companies cry a lot. When businesses collapse and economy is hampered, people lack the purchasing power, so, little is bought.
“NB: cheque, scientifically, stabilizes the market globally. For it to do so, it needs a minimum number of transactions I may call it the threshold value. We are in this threshold value that’s why the current decline is slower that it was before. After a span of time, the complex forces, as described in the general approach, will make users revolt from using them, hence, the number of transactions will fall below this threshold value and it will not be able to maintain its role and the market will not be stable scientifically, if we lack an acute substitute. This is where the GMC sets in '''[a scientific certainty, not mathematical]'''
Right now we have the crisis only that it is within the limits/ it is contained. The people who are now paying dearly are the cheque users. And since all crises are progressive in nature, as decline in use continues, the scenario will change. It will explode and affect the entire market; lower trade volumes, affect economies, affect governments, bring in inflation, and lead to unemployment and redundancy cases among others.
Not unless we develop an alternative before that natural/ ‘forced’ time comes, we will find ourselves in a state where we will not be able to withhold the pressure that will result from the explosion. This will be more than the current '''Euro zone crisis''' in Europe or the '''global financial crisis'''– is like a death wish. This is because, as explained earlier, everything in the world is held by universal laws and physics laws are part of them.
With expensive cheques, people will shift from using it. Since it has no acute alternative/ substitute (as seen in UK 2009-episode and its long existence despite its inefficiencies and competition from e-payments)
<ref>www.paymentcouncil.org.uk</ref> then, people who use it as alternative may not buy. Not that they will shift to the available e-payments, and when circumstances/ situations that forced them to use cheque appear, they will not buy because the available means will not satisfy them.
* In Kenya, from April year 2012 to April year2013, cheque fraud accounted 30% of all fraud in KBA banks recording the highest form of fraud (posted in Daily Nation paper-21/5/13)
C. CURRENT MARKET CONDITIONS THAT WILL TRIGGER GMC
Right now, this GMC ‘smells,’ it is in the offing. For any crisis to occur there must be a presence of conditions favorable for its induction. The following are live and ‘kicking.’
01. The current market inconsistencies where people and businesses, especially SMEs, are still using the expensive and inefficient cheques despite the presence of diversified digital platforms specifically designed to suite their desires.
02. Where cheques are mostly used; SMEs in B-2-B transactions. So, when they revolt/ stop/ tire from using them, the distribution channel of goods and the market at large will be adversely affected.
03. Power of cheques to activate the GMC scenario; cheque will affect the entire market sine, it is a global means of payment.
All crises normally take two key stages. They all start small; with signs. Here we say that they are in the preliminary stage. At this stage, only few people are able to notice them. And since they are progressive in nature, they heap up as time goes by up to a certain precise time when the signs break loose/ bursts out. They then enter a stage dubbed "crisis stage". Here, even the blind see and feel the pressure and consequences delivered by them. Global crises have been occurring only to be realized at the latter stage when everything has fallen apart.
D. GMC TIMEFRAME
GMC is meant to start as from 2018 (in some countries as stated below / also in the research paper) and proceed to others till 2022 when all over the world, the menace is meant to be felt everywhere.
NB:
- Some countries and continents faced a rapid decline and they are the countries that will reach and experience GMC first. They include most of EUROPEAN COUNTRIES, UK and AUSTRALIA (As from early 90s onwards)
- For slower initial and late decline, other countries and continents will be there later. They include some BIC countries like CHINA, SINGAPORE, RUSSIA, USA and the AFRICAN continent. (see cheque use in these BIC countries)
- Though these BIC Countries will experience the crisis later, they’ll be affected most as they practice intensive and mass production and sale. And since Africa is in the transformation mode, the threat is also meant to be equally severe as its counterparts, since it might take the wrong turn.
- Other countries and continents occur in between the time bracket and their reach at the point will be dependent on the rate of decline they are undergoing.
- By 2022, all countries and continents in the world are meant to have been engulfed by this menace.
We will save the market because of two chief reasons;
* To save SMEs from this global confusing puzzle of using the inefficient, fraudulent and expensive cheques that mostly limit their business operations whereas we have widespread payment systems in every country of this world.
* To avert the incoming crisis that might see the currently booming economy slump in a great deal.
Currently, the world needs to come up with a proper plan on cheque's exit from the market, as we bridge to the historical world's mission; to embrace a pure cashless society otherwise, it will leave the global market devastated and confused. Though the above projected repercussions may seem as only a citation and far from real world existence, but they will happen if no plans are placed to bid cheque farewell for its existence and help in the payment industry, for over 35 decades.
E. RECENT CHEQUE MEASURES
# RBI of India announced that it would see cheque dis-incentivisation so as to force SMEs shift to e-payments- 2012/13 (probably without checking the absolute reasons as to why the group still rely on them and what might follow as a result of their decisions).
# In Malaysia, SMEs to gain from cost-effective e-payments, where they will save up to 1% of GDP annually – the Star online, <ref>www.thestar.com>Home>Business</ref> ( Posted on 14th Feb 2014)
Please lets open this for a global discussion! May also view my full research-paper on http://stevegmc.blogspot.com/2015/07/gmc-and-cheque.html
Follow me on twitter @Dcskenya | @stevekings100
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