As of January 1, 2021, Nedbank clients will no longer be able to use cheques as a payment option.
In an announcement, on Tuesday the bank said this is because few clients make use of the service. The decision to stop offering cheques was not taken lightly.
Anton de Wet Chief Client Officer at Nedbank Retail and Business Banking said the extensive availability of cheaper, safer and more convenient digital, card and other payment alternatives, had largely driven a rapid decline in the use and acceptance of cheques in South Africa over the past few decades.
“It has become clear that cheques have become obsolete and can no longer be supported.”
Cheque payments contribute less than 0.1% of total payment volumes in South Africa.
“The Covid-19 pandemic has further accelerated the decline of cheque use as clients opted for safer, paperless payment options. This trend is not expected to reverse,” De Wet said.
Nedbank began the process to suspend cheques in 2019, to help clients migrate to more suitable options.
Aart Jurriaanse, divisional executive of transactional information solutions at Nedbank CIB, explained the process as of January: “Parties that have been paid with a cheque will have to deposit the cheque before January 1, 2021 for the payment to be processed. Clients that have a Nedbank-issued cheque after January 1, 2021 will not be able to deposit the cheque and will have to contact the person or entity that issued the cheque and request an alternative payment, as the cheque will no longer be accepted at any bank.”
From May 2020 the banking sector reduced the cheque limit from R500,000 to R50,000. This was driven mainly by concerns arising from persistent fraud in its use.
Nedbank is the last of the ‘big four’ banks to announce the abandonment of cheques.
FNB stopped printing cheque books this month and will no longer issue cheques come the end of the year. Standard Bank will no longer issue cheque books from October 1 2020 and Absa will exit cheques as a payment instrument by the end of this year.
Deputy CEO of Absa’s Retail and Business Bank Bongiwe Gangeni, previously said bank charges for processing cheques are relatively high, making it an expensive form of payment.
“Moreover, with the need for verification and validation, it can take up to 10 days for a cheque to clear. This extended timeframe makes the process more open to abuse and fraud.”