Cheques have been around for three centuries. But with each passing year there’s another nail in the coffin. Absa is adding one more.
If you talk to anyone aged younger than around 35 about a ‘cheque’ they’ll likely think you’re referring to a citizen of the Central European nation. Speak of a ‘cheque that bounced’ and they’ll imagine it’s the same person from the Czech Republic on a trampoline!
Writing or cashing cheques in modern South Africa has become about as extinct as the dodo and as non-existent as a credible politician. Okay, maybe you’ll find a dodo somewhere…
From 1 May, writing a cheque for an amount exceeding R50 000 become illegal in the country.
Now, to add another nail in the coffin of the 303-year old method of payment, Absa has announced that will stop issuing new cheques from the start of July. It will also stop accepting them as a payment instrument from December 2020.
Business Insider quotes Bongiwe Gangeni, Absa’s deputy chief executive of retail and business banking, as saying cheque volumes in South Africa have fallen to 80% compared to 10 years ago, making them uneconomical and commercially unviable. Cheques have been crowded out by electronic transactions and banking cards, he noted.
“We realise that this may impact the longstanding banking experience of some of our customers – we have alternative digital payment instruments such as online banking, card payments and electronic fund transfer (EFT) capabilities available. These options are safer, convenient, and more efficient than cheques,” Gangeni said.
But there have been other problems with cheques, unrelated to there being newer and more technologically advanced ways of making payments.
According to a 2018 consultation paper released by the SA Reserve Bank, the emergence of ‘cheque washing’ – criminals are using chemicals to erase the information on a cheque to replace it with false details – has become more common and problematic.
Is there anyone left in South Africa who still uses or accepts cheques?
SARS will still take a cheque, providing it doesn’t exceed the R50 000 limit. But it adds on its website: “No splitting of payment to circumvent the new cheque item limit will be allowed, e.g. issuing two cheques for the amount of R50 000 each to make a payment of R100 000, according to the PASA (payments Association of South Africa) rules.”
When it comes to using cheques, perhaps the most prominent person to admit doing so is Finance Minister and former Reserve Bank Governor Tito Mboweni.“I am probably one of the few remaining people who still insist on writing a cheque. You can’t get rid of us! Sorry!” he said in a tweet of 6 June.
See the Minister’s Tweet here:
Predictably, the Twitterverse was not happy (it seldom is …), with one responder saying: “That’s the problem with SA old school leaders; they will never progress and look to innovate!” Commented another: “I’m so tired of these geriatrics, honestly.”
Michael Jordaan, chairman of Bank Zero and former CEO of FNB, also weighed in. “Please embrace the future Minister. Electronic payments will soon cost zero, while cheques are manual, expensive and prone to fraud,” he said.