Absa Group will phase out cheques as a means of payment by the end of this year. The bank will still honour cheques from third parties, as the instrument slowly declines in use. An article by Absa Group Head of Retail and Business Banking Bongiwe Gangeni reveals that the bank will exit the form of payment in favour of growing digital payment methods.
“…Absa made a business decision to exit cheques as a payment instrument by the end of this year,” Gangeni says.
Gangeni says that the inevitable exit is partly a risk management initiative. Cheques need verification and validation over extended periods which leaves room for abuse and fraud. Further, exiting the cheque system follows efforts of the South African Reserve Bank to reduce the maximum value of a cheque from R5 million ($286,000) to R50,000 ($2,861) in the past eight years.
Earlier, the bank announced that it would stop issuing chequebooks to clients in July, as cheque volumes fell by over 80% in the past decade.
Digital Transactions to Take Over Absa Cheques
Customers of the bank will now rely on various digital platforms to transact, including internet banking, USSD, Chat and internet banking. Clients could also use Electronic funds transfer and Chat banking, depending on the nature and value of transactions.
The bank group will phase put the payment instrument, maintaining clear communication to avoid disruptions.