The earliest evidence of using cheques comes from in India when a commercial instrument called the adesha was used during the Maurya Empire (321 to 185 BC), which was an order on a banker to pay the amount on the note to the person holding the note. There is also evidence that ancient Romans used an early form of cheque known as praescriptiones in the 1st century CE.
During the third century CE, Persian banks issued letters of credit called čak, translated as “document” or “contract”, which later became the sakk used by traders in Arab-ruled lands. By the ninth century, a merchant in one country could cash a sakk drawn on his bank in another country.
Now, after many centuries, it is time to change to other ways of paying.
The South African Reserve Bank (SARB), Financial Sector Conduct Authority (FSCA), Payments Association of South Africa (PASA) and the Banking Association South Africa (BASA) jointly informed the public that the issuing and the acceptance and collection of cheques will stop from 31 December 2020.
The SARB said in a statement that the decision was taken because using cheques has so many challenges, such as:
- A lengthy processing period;
- Fraud when cheques are issued;
- Cheques are an expensive payment instrument;
- Cheques are not accepted everywhere;
- Less people are using cheques;
- Limited education and protection for the consumer;
- Ageing interbank cheque processing infrastructure; and
- The impact of the coronavirus pandemic outbreak.
South African banks will not accept any cheques for depositing or cashing after 31 December 2020. According to FNB, using cheques has been declining by 30% annually and during level 5 of the lockdown, volumes decreased by 80% as customers adapted to digital platforms. Cheque payments in South Africa contribute less than 0.1% to the total ecosystem in the country.
“Cheques have been one of the most treasured payment methods by some customers and symbolised a different era of innovation. As a result, their necessary discontinuation is a nostalgic moment for us and our customers. However, we believe the future of payments is even more exciting for all of us,” says Jacques Celliers, chief executive of FNB.
“We issued our last cheque book in September this year but the journey to migrate our customers to safer and more efficient digital payments methods have been running for years. We offer a range of efficient payment alternatives, including electronic funds transfer (EFT), mobile payments, online banking and card payments. These payment methods are far more advanced, safer and cost-effective for both businesses and individual customers.”
Nedbank has also embarked on a journey to stop using cheques completely in 2021. The first phase was the suspension of issuing new chequebooks and bank cheques, the offering of special clearances and the returning of processed cheques with statements. The bank says it will still process foreign cheques or drafts in 2021.
Standard Bank says it started the journey to the discontinuation of cheques on 1 September 2020 when all cheques deposited became subject to the mandatory 7 business days clearance period before the funds were made available. On 1 October 2020 the bank stopped the ordering and issuing new chequebooks.
If clients issued cheques before 31 December, Standard Bank will allow 21 days after 31 December 2020 to process these cheques.
According to Absa, there will be no changes to clients’ cheque accounts, account numbers or terms and conditions. The bank will also not issue bank guaranteed cheques anymore, while special clearances of cheques will no longer be allowed, with the standard 10 day period applying.