The Payments Association of Association (Pasa) will reduce the maximum value for writing a cheque from the current value of R500,000 to R50,000 from 1 May 2020.
Pasa CEO Walter Volker said that this decision 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% of signed cheques are for values above R50,000, the inherent risk of transactions above R50,000 is higher, based on potential fraud,” Volker said.
“A reduced cheque limit will thus reduce the risks associated with fraud losses and system failures.”
Volker said that the use of cheques has been declining at a rapid rate – down approximately 30%, year on year – driven by the shift in consumer habits. South Africans opt for the convenience and safety of digital payments, Volker said.
He added that the South African Reserve Bank (SARB) has also endorsed the reduction, which was informed by an extensive consultation process.
“The SARB supported the decision to reduce the item limit 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 (NPS),” he said.
Volker also stressed that there would be no immediate changes to current banking systems.
“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,” he said.