Planning on writing a cheque for more than R50,000? Think again
The Payments Association of South Africa has reduced the cheque limit from R500,000 to R50,000.
The Payments Association of South Africa (PASA) has announced that, after careful consideration and consultation with key stakeholders, it will be reducing the maximum value for writing a cheque from the current value of R500,000 to R50,000 with effect from 1 May 2020.
PASA CEO Walter Volker believes that this limit reduction stems from the need for better risk management and the ongoing decline in the use of cheques as a payment method.
“Although less than 10 percent of signed cheques are for values above R50 000, the inherent risk of transactions above R50 000 is higher, based on potential fraud. A reduced cheque limit will thus reduce the risks associated with fraud losses and system failures,” says Volker
“The use of cheques has been declining at a rapid rate of approximately 30 percent year on year, driven by the shift in consumer habits, with South Africans opting for the convenience and safety of digital payments.”
According to the statement, there are a variety of interoperable digital alternatives for consumers ranging from debit- and credit card-based payment solutions to electronic funds transfer (EFT) and real-time clearing (RTC) payments with future developments being designed to enable new offerings.
Consumers and businesses are now adopting these payment mechanisms over cash- and cheque-based payments. The statement explained that digital payments are not only more efficient than cheques, but are also safer and more convenient for consumers.
The South African Reserve Bank has also endorsed the reduction decision on the basis that it supports the National Payment System Framework and Strategy – Vision 2025 objective of promoting safer, cost-effective and efficient electronic payments in the National Payment System.
“There will be sufficient preparation within the banks to effect the system changes, and firms will have sufficient time to adapt to the new rules before 1 May 2020,” Volker said.