South African banking major Absa Group has announced that it will discontinue issuing cheque books to its clients from July onwards in view of decline in use of this mode of payment.
Use of cheques has recorded a major dip in the last decade, especially after bank cards and electronic banking gained prominence, the Absa Group said.
“Cheque volumes in South Africa have fallen to 80 per cent compared to ten years ago, making cheques uneconomical and commercially unviable,” said Bongiwe Gangeni, Absa Group deputy chief executive, retail and business banking.
The Absa Group decision follows the South African Reserve Bank (SARB) drastically reducing the maximum legal value for issuing a cheque from 500,000 rand to 50,000 rand. The minimum amount was reduced from 5 million rand in 2012.
“A cheque is one of the oldest recognised payment instruments in South Africa and also globally. However over the years with the ever-increasing usage, cost-effectiveness, efficiency and convenience of electronic payments such as cards and electronic fund transfers (EFTs) the usage of cheques has declined,” the SARB said in a report.
“Fraudulent activities and scams are prevalent in cheques,” SARB added, citing examples of forgery, fraud, counterfeiting and ‘cheque washing’, a process of erasing all information from a genuine cheque.
“Against this background, Absa has taken a business decision to exit cheques as a payment instrument from its product functionality by December 2020,” Gangeni said.
