Banks will start phasing out the use of cheques pretty soon. Customers have been using cheques less frequently over the years, leading to very little use for them in the banking industry.
The South African Reserve Bank (SARB) has announced that banks will no longer be accepting cheques after 31 December 2020.
“The South African Reserve Bank (SARB), Financial Sector Conduct Authority (FSCA), Payments Association of South Africa (PASA) and the Banking Association South Africa (BASA) are jointly communicating to the public that the issuing and the acceptance/collection of cheques will cease, effective from 31 December 2020,” the department said in a statement.
The reserve bank said this decision was taken because cheques have a long processing period and are often used for fraudulent activities.
Covid-19 has also played a role, as the use of cheques has decreased during this period.
"South Africa’s cheque processing and clearing model is manually intensive, requiring multiple physical interactions between cheque users, bank staff, courier companies, and the cheque processing staff to clear the cheque." said SARB.
Cheques have also become expensive to process, as they go through various stages before being finalised.
This is unlike electronic payments which are quicker and cheaper to process. The bank said the industry aims to provide customers with more affordable and reliable payment options.
Banks will have to inform customers about the upcoming changes and inform them about alternatives that they can use now that cheques will no longer be in use.
“Affected stakeholders are therefore requested not to write/draw or accept cheques after 31 December 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,” said SARB.