As of 31 December, 2020, South African banks will not accept any cheques for deposit or encashment…
The end of an era. According to reports, payments by cheque constituted only 0.1% of the total ecosystem in South Africa. A statement from FNB noted that cheque payments have been declining 30% annually, and the level 5 lockdown dealt a final blow to the paper system as even the most technology-averse customers were forced to adapt to digital payment methods.
Reflecting on the legacy of cheques ahead of the 31st December deadline, FNB Chief Executive Jacques Celliers says the end of cheques is a historic moment for South Africa.
“Cheques have been one of the most treasured payment methods by some customers and symbolised a different era of innovation. As a result, their necessary discontinuation is a nostalgic moment for us and our customers, however, we believe the future of payments is even more exciting for all of us,” he says.
The decision to discontinue cheques was made 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).
The entities considered several factors when making the decision including:
- 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
In preparation for the discontinuation, Nedbank stopped issuing new chequebooks in September this year. “With the increasing availability of alternative cheaper, safer and more convenient payment methods, cheques have become obsolete.”
The bank advised customers to make use of other options that are “cheaper, safer and more convenient than cheques.”
“Goodbyes are never easy,” Absa said in a note to its customers. “As of 31 December 2020 we will no longer issue, encash, deposit or collect cheques.”
“Due to the high incidence of fraud and theft related to cheques, coupled with South Africans opting for the convenience and safety of digital payments over the past years, Absa, along with other major banks is discontinuing cheques as a payment method.”
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