End of an era: Absa to scrap cheques - starting next month
- Absa will stop issuing new cheques from the start of July.
- The use of cheques dropped 80% from a decade ago, and the bank says cheques are now unviable.
- The maximum legal amount on a cheque was slashed last month from R500,000 to R50,000 amid security concerns.
- For more articles, go to www.BusinessInsider.co.za.
Absa will stop issuing new cheques from the start of July, a death knell to the once-popular payment form.
Cheque volumes in South Africa have fallen to 80% compared to ten years ago, making cheques uneconomical and commercially unviable, says Bongiwe Gangeni, Absa’s deputy chief executive of retail and business banking. Cheques have been crowded out by electronic transactions and banking cards.
And last month, SA’s banking authorities slashed the maximum legal value for which a cheque may be issued in South Africa from R500,000 to R50,000.
This was due to security concerns, including problems with forged, altered and counterfeit cheques. In a report, the Reserve Bank also noted the emergence of “cheque washing” - criminals are using chemicals to erase the information on a cheque to replace it with false details.
“Against this background, Absa has taken a business decision to exit cheques as a payment instrument from its product functionality, by December 2020,” says Gangeni. “To ensure minimum disruption to customers, a phased approach will be followed and from 1 July new cheque books will no longer be issued to Absa customers.”
In a letter to clients, Absa also confirmed that no bank cheques will be available from 1 July.
And from next month, customers will no longer be able to request clearance of cheques, and they won't receive a copy of their cheques with their statements.
“We realise that this may impact the longstanding banking experience of some of our customers – we have alternative digital payment instruments such as Online Banking, cards payments and electronic fund transfers (EFTs) capabilities available. These options are safer, convenient, and more efficient than cheques," says Gangeni.
Absa frontrunner Volkskas has been issuing cheques since 1941.
Absa will continue to honour all third-party cheques deposited, for as long as cheques are accepted by the industry, Gangeni says.
Receive a daily update on your cellphone with all our latest news: click here.
Get the best of our site emailed to you daily: click here.
Also from Business Insider South Africa:
- Load shedding is still likely in July, Eskom says – but that’s better than having it in summer
- MTN confirms it is launching a 5G network at the end of the month
- The rand dropped below R17 to the dollar – and that’s good news for the petrol price
- Hackers on the dark web love South Africa - here's why we suffer 577 attacks per hour
- Woolworths is using more than 1 million plastic bottles to make its puffer jackets