One of the oldest payment methods will no longer be used in SA
“In this regard, South African banks will not accept any cheques for deposit or encashment after 31 December 2020.”
The issuing and the acceptance or collection of all cheques will cease, effective from 31 December 2020.
This was announced by the South African Reserve Bank (SARB), Financial Sector Conduct Authority (FSCA), Payments Association of South Africa (PASA) and the Banking Association South Africa (BASA) on Wednesday.
The cheque is one of the oldest recognised payment instruments globally, while in South Africa, it has been a popular form of payment instrument in the past.
However, over the years, with the growing cost-effectiveness, efficiency and convenience of electronic payments such as cards and electronic funds transfers (EFTs), the usage of cheques has declined on an ongoing basis globally.
Other countries such as Australia, Singapore and the United Kingdom (UK) have also experienced a decline in cheque usage.
The Reserve Bank in a statement said this decision was taken due to the “numerous challenges” associated with the usage of cheques.
Some of these challenges include:
– a lengthy processing period
– fraud perpetrated through the issuing of cheques
– cheques as an expensive payment instrument
– the restricted acceptance of cheques
– declining usage
– limited education and protection for the consumer
– ageing interbank cheque processing infrastructure
– impact of the coronavirus outbreak
“The usage of cheques has been declining year on year, as consumers increasingly adopt alternative, safer, more efficient and convenient electronic payment instruments.”
It said furthermore, the usage of cheques were not contributing positively to the safety or efficiency of the national payment system (NPS).
“In this regard, South African banks will not accept any cheques for deposit or encashment after 31 December.”
The Reserve Bank also urged other banks to extensively communicate with their clients leading up to and beyond the discontinuation of cheques.
The banks were urged to educate their clients on alternative electronic payment methods that may be used.
“Affected stakeholders are therefore requested not to write, draw or accept cheques after 2020. They are encouraged to approach their banks to be offered alternative electronic payment methods or to direct any queries they may have related to the process of termination of the usage of cheques.”
The Reserve Bank said this move would improve business continuity in SA for electronic payments.
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