The South African Reserve Bank (SARB), Financial Sector Conduct Authority (FSCA), Payments Association of South Africa (PASA) and the Banking Association South Africa (BASA) have today collectively agreed that that the issuance and the acceptance of cheques will stop totally from the 31st of December 2020.
The Reserve Bank stated that they measure has been taken due to the numerous challenges that come with the usage of cheques.
Some of the challenges the bank lists are:
- 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 pandemic (Covid-19) outbreak.
“In this regard, South African banks will not accept any cheques for deposit or encashment after 31 December 2020,” the SARB said.
“Banks are expected to extensively communicate with their clients leading up to and beyond the discontinuation of cheques. Furthermore, to educate their clients on alternative electronic payment methods that may be used.”
In effect, individuals and businesses in South Africa are being asked to not write or issue out or accept cheques after the 31st of 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 consultative paper from four stakeholder bodies said.
More details about the phasing out of cheques from the South African payment system in the SARB’s consultation paper can be accessed here.
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