Sorry, your cheque is no longer in the post

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The SA Reserve Bank, the Payments Association of SA, the Banking Association of SA and the Financial Sector Conduct Authority officially announced the death knell for cheque transactions late last year. Picture: iStock.Gallo Images
The SA Reserve Bank, the Payments Association of SA, the Banking Association of SA and the Financial Sector Conduct Authority officially announced the death knell for cheque transactions late last year. Picture: iStock.Gallo Images

PERSONAL FINANCE


The days of cashing cheques, crossing cheques and – thankfully – cheques that “bounce” are over for good. As of January 1, cheques are no longer recognised as a method of payment in South Africa.

The SA Reserve Bank, the Payments Association of SA, the Banking Association of SA and the Financial Sector Conduct Authority officially announced the death knell for cheque transactions late last year. No cheques may be issued any longer, although some banks will still honour cheques that were deposited before December 31.

The use of cheques has declined sharply over the past few years, as digital payment methods such as electronic funds transfers and debit cards have become more convenient and cheaper.

Cheque transactions take much longer than digital payments and often take up to 10 days or more to clear. They are also much more expensive. Until recently, the transaction cost of a cheque averaged R200.

The outbreak of the Covid-19 pandemic hastened the downfall of cheques, as more people switched to paperless, online transactions.

For example, since the start of the lockdown at the end of March, Standard Bank has seen an 80% decrease in cheque transactions.

Between August 2019 and August last year, the use of cheques in South Africa decreased by 59% and the value of cheque transactions decreased by 82% over the same period, according to the SA Reserve Bank.

South Africa’s neighbour, Namibia, abolished the use of cheques in July 2019. These days, it is expensive and cumbersome to do transactions with cheques – and it is much easier to commit cheque fraud

South Africa’s model and infrastructure for cashing cheques are extremely labour-intensive and require multiple interactions between customers and bank staff.

Bongiwe Gangeni, deputy head of retail and commercial banking services at Absa, says cheque transactions declined so much over the past decade that they eventually accounted for less than 0.1% of payments.

Debit cards, cash and CashSend are Absa customers’ preferred payment methods.

“However, people with cheque or current accounts can rest assured that getting rid of cheques will not affect their banking business and that they’ll still be able to do transactions,” she says.

Banks will still help customers clear cheques they receive from overseas. However, this “can take six to eight weeks, depending on the amount”, cautions Gangeni.

Kenneth Mtlhole, product head at FNB, says fewer than 0.6% of the bank’s customers have been using cheques lately.

FNB issued its last chequebook in September, and the bank has been running an awareness campaign for some time to get consumers to switch to electronic payment methods.

The use of cheques has declined sharply over the past few years, as digital payment methods such as electronic funds transfers and debit cards have become more convenient and cheaper.

In 2019, Nedbank started helping its customers who use cheques to migrate to other payment methods.

The bank stopped issuing and printing cheques in September.

“After January 1 2021, people will no longer be able to deposit cheques issued by Nedbank and will have to contact the person who issued the cheque for an alternative payment method,” says Aart Jurriaanse, head of transactional information solutions.

Cheques deposited before December 31 will still be honoured early this month.

Standard Bank says it issued its last chequebook on October 1.

THE WRITING ON THE WALL

Cheques are one of the oldest payment methods in the world.

The ancient Romans used a form of cheque to trade, as did Arab merchants when transporting large amounts of gold and silver across the vast desert, Moneyweek reports.

The Venetians and Florentines in Italy continued the use of cheques in Europe in the 12th century.

However, cheques are dying out worldwide – especially in countries such as Australia, the UK and Singapore.

READ: Technology is Africa’s answer amidst the Covid-19

South Africa’s neighbour, Namibia, abolished the use of cheques in July 2019.

These days, it is expensive and cumbersome to do transactions with cheques – and it is much easier to commit cheque fraud.

Standard Bank says there was a sixfold increase in cheque fraud incidents last year compared with 2019.

THE MAIN FORMS OF CHEQUE FRAUD

  • Forged cheques: Usually when someone’s chequebook has fallen into the wrong hands and the fraudster copies the account-holder’s signature.

  • Counterfeit cheques: They look like real cheques, but are printed on paper not issued by a bank.

  • Altered cheques: Even if these types of cheques were legally issued, details such as the beneficiary’s name or the amount are changed.

  • Chemically treated cheques: The details written on the cheque are erased with chemicals and false information is entered instead.


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