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South Africa gives six weeks' notice of the abolition of cheques.

BIScom Subsection: 
Author: 
Editorial Staff

31 December 2020 is a Thursday. 1 November is, therefore, Friday. The moment that is neither of them, midnight, is a pivotal moment in the history of financial services. It is at that moment that South Africa's banks become the banks that say "no." No to cheques that is. Anyone to tries to present a cheque after that moment, will be turned away.

The notice, issued 18th November 2020, follows a consultation paper (‘The phasing out of cheques in the national payment system’ - here https://www.resbank.co.za/Regu...(NPS)/Legal/Pages/Documents-for-Comment.aspx) issued 2nd October 2020.

South African banks will not accept any cheques for deposit or encashment after 31December 2020.

South African Reserve Bank, Financial Sector Conduct Authority,Payments Association of South Africa and the Banking Association South Africa

The rationale is given as

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 acceptanc eof cheques
declining usage
limited education and protection for the consumer
ageing interbank cheque processing infrastructure
impact of the coronavirus pandemic (COVID-19) outbreak

The official notice is at https://www.resbank.co.za/Regu...(NPS)/Legal/Pages/Information%20papers.aspx.

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. Affected stakeholders are therefore requested not to write/draw or accept cheques after 31 December 2020.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 [use] of cheques.

It has to be noted that only paper cheques are being abolished. Unlike many countries, there is no push to e-money, electronic wallets and the like.

All banking channels will work as now.

The only realistic difficulty is in rural communities - and South Africa's enormous shanties - where access to electronic banking may be problematic.

If we take a sideways example: in shanty towns, there has long been a history of shared electronic services, even pre-dating the internet. There would often be, for example, a hut into which people wold crowd to watch TV or a video (and yes, we're talking about video cassettes. Shared internet services have been common. It remains to be seen whether there will now be shared access to on-line banking with the clear risk that presents to the unwary, lazy or to-busy-to-think.

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