The issuing and the acceptance or collection of cheques will officially end on 31 December 2020. The announcement was made in a statement issued yesterday 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 statement drew attention to a formal notice issued by the Reserve Bank announcing “the exiting of cheques”.
The announcement came a week after the South African Revenue Service (SARS) issued a statement into the effect that it will discontinue accepting cheques as a form of payment from 14 December 2020.
According to the four payment bodies, this decision was taken due to the numerous challenges associated with the usage of cheques. These challenges include:
- 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
The full details of the decision were previously outlined in a consultation paper titled “The phasing out of cheques in the national payment system”, available here: http://www.resbank.co.za/RegulationAndSupervision/NationalPaymentSystem(NPS)/Legal/Pages/Documents-for-Comment.aspx
As a result, South African banks will not accept any cheques for deposit or encashment after 31 December 2020.
“Banks are expected to extensively communicate with their clients leading up to and beyond the discontinuation of cheques,” read the statement. “Furthermore, to educate their clients on alternative electronic payment methods that may be used.”
The four bodies requested stakeholders not to write/draw or accept cheques after 31 December 2020, and to approach their banks to be offered alternative electronic payment methods.