While many businesses still make use of the humble cheque to make payments, the time to ditch the payment method is fast approaching, especially if your payments are often more that R50 000.
In July 2019, the Payments Association of South Africa (PASA) announced that the maximum value that could be paid via cheque would be reduced from R500 000 to just R50 000.
The reduction takes effect on 1st May 2020.
“Given the reduction of cheque limits due to several issues including fraud, it may not be viable for businesses to continue using cheques,” explains spokesperson for FNB Business, Kenneth Matlhole.
“Regardless of the final decision to be taken by businesses, one thing is clear, the imminent reduction of cheque limits to R50 000, leaves businesses and institutions with no choice but to ultimately reduce their reliance on cheque payments,” says the spokesperson.
Naturally, this means switching to a more modern payment solution but as with most things, it’s not as easy as deciding you’re ditching cheques.
Business owners and decision makers should spend time ahead of the reduction implementation migrating to new payment systems. In addition to training staff members accordingly, businesses should also inform suppliers and associates about its new payment systems.
FNB Business’ advice is to conduct an analysis of how your business makes use of cheques.
“Once a thorough analysis of how the business uses cheques has been conducted, the next step is to identify the most appropriate and efficient electronic banking channel to use. Furthermore, businesses that are still receiving B2B cheque payments should ensure that their systems are updated and ready to accept electronic payments,” explains Matlhole.
There are two reasons for the reduction in maximum cheque value namely better risk management and, well, very few people still use cheques.
“The use of cheques has been declining at a rapid rate of approximately 30% year on year, driven by the shift in consumer habits, with South Africans opting for the convenience and safety of digital payments,” chief executive officer at PASA, Walter Volker, said in a statement.
Beyond that, cheques are simply less convenient than other, more modern payment methods and nobody likes waiting seven to ten working days for their money.[Image – CC 0 Pixabay]