Faizel Patel – 19/11/2020
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 announced that South Africa will no longer make use of cheques from December 31, 2020.
It’s understood the decision was was taken due to the numerous challenges associated with the usage of cheques including a lengthy processing period, fraud perpetrated through the issuing of cheques,restricted acceptance of cheques, declining usage and the impact of the COVID-19 pandemic among others.
The Sarb say banks are expected to extensively communicate with their clients leading up to and beyond the discontinuation of cheques and to educate their clients on alternative electronic payment methods that may be used.
Speaking to Radio Islam, the South African Banking Risk Information Centre’s (SABRIC) Nischal Mewalall says the decision to eliminate the use of cheques has been on the table for a while.
“It’s not something very unique to South Africa, in fact we are little bit behind the curve. Many other countries have already taken that position. So if you look at the Nordic countries, many have stopped this method payment. Across Europe as well, many countries there including Belgium, Netherlands, Austria, Germany, they’ve all stopped this method of payment because customers are preferring a more advancement type of payment system.”
Mewalall has urged South Africans to engage with their banks about how to dispose of cheques that they no longer use.
“Depending who you bank with, have a conversation with your banker, find out what is their guidance in terms of how that specific bank wants you to treat that cheque. Sometime they are going to ask you destroy the cheque, make sure you are recording the numbers on each sleeve whatever it may be. But take their guidance and advice because it’s unique to each bank.”
Mewalall has warned that while cheques will only be discontinued on end of the 2020, they are still valid and a legal tender until then adding that it is unclear whether the directives affect travellers cheques which is widely used by travellers and travel industry.
Listen to the interview with Nischal Mewalall