Checkmate for cheques as the payment form is phased out in SA
- Cheques as a method of payment will be phased out of South Africa’s payment system.
- The use of cheques has been dropping at a yearly rate of 30%, according to the Payment Association of South Africa.
- Cheques have become a less convenient and risky form of payment.
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From January 2021, cheques will no longer be accepted as a form of payment in SA, marking the demise of what used to be the most popular non-cash payment method.
In a statement released on Wednesday, the South African Reserve Bank, Financial Sector Conduct Authority, Payments Association of South Africa and the Banking Association South Africa, said the issuing and the acceptance or collection of cheques will cease, effective from 31 December 2020.
This decision was taken due to numerous challenges associated with the usage of cheques, said the banking authorities. These include lengthy processing periods, fraud emanating from the issuing of cheques and limited knowledge and protection for the consumer.
Other factors such as the restricted acceptance of cheques, its declining usage, an ageing interbank cheque processing infrastructure as well as the impacts of the coronavirus informed the decisions.
“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,” the joint statement said.
Earlier this year, SA’s banking authorities moved to significantly reduce the cheque limit from R500,000 to R50,000 in order to protect consumers.
South Africa’s big four banks, whose industry has been facing digital disruption, had already announced their plans to scrap the antiquated payment method in favour of bank cards and digital payment systems.
SARS followed earlier this month, saying it will no longer allow cheques as a form of payment at customs ports of entry from 14 December 2020.
According to the Payment Association of South Africa, the usage of cheques has been declining at a rapid yearly rate of approximately 30% in the wake of shifting consumer habits and South Africans opting for more safe and convenient digital payments.
Consumers and business entities have now moved to making used of digital alternatives, which have experienced significant growth over the years, such as debit and credit card based payment solutions, EFTs, as well as real time clearing payments.
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