South Africa is officially phasing out the issuance and acceptance or collection of paper cheques from the national payment system, starting from 31 December 2020.
The decision was jointly taken 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 central bank, in its consultation paper, noted that the decision to ditch cheques was taken due to several reasons with one of the reasons being security concerns.
The issuance of cheques could lead to fraud and cheque payments involve a lengthy processing period, noted SARB.
Cheques are said to be an expensive payment instrument, with limited education and protection for consumers.
The ageing interbank cheque processing infrastructure also proves challenging for the usage of cheques.
Additionally, the impact of the Covid-19 pandemic has led to its decline, in terms of both usage and acceptance.
The SARB said: “In this regard, 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. Furthermore, to educate their clients on alternative electronic payment methods that may be used.”
The SARB also added that affected stakeholders are advised not to transact using cheques after the year-end.
SARB added: “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.”
Last month, Westpac NZ decided to phase out cheques as it moves to other forms of payments.