The maximum value for which a cheque can be written has been reduced from R5-million to R500 000‚ the Payments Association of South Africa (PASA) announced on Monday.
The new limit will come into effect from 16 July 2012.
"During the last six months the banks have contacted affected customers directly to understand any impact and to ensure that customers are aware of alternative electronic payment options‚" said Walter Volker‚ PASA’s Chief Executive Officer.
Further‚ banks have been planning system and operational changes to accommodate the revised limit.
The change of the limit to R500 000 was motivated by the significant fraud risk that exists in high value cheques and the inherent inefficiencies that characterize this payment instrument‚ as well as the fact that the change will not affect many customers - only 0.7 percent of customers write cheques for more than R500 000.
Volker noted that cheque volumes and values have reduced consistently over the last five years.
The decline continues at a steady rate of 20 percent on average per annum. This is a worldwide trend and is a market signal for preference of electronic payments. These alternatives developed over the last 10 years include amongst others card‚ debit orders‚ internet and mobile payments.
There has been strong support for the change to the limit from many stakeholders aside from PASA member banks.
Domestically‚ SARS has also informed the public that it will not accept cheque payments for values greater than R100 000. Similarly in the Common Monetary Area‚ countries like Swaziland‚ Namibia and Lesotho have aligned cheque limits‚ with Swaziland also adjusting their limits to R500 000 in July 2012 and Namibia considering a further decrease to R100 000 in 2013. Lesotho is already on a R100 000 limit.
"All of this augurs well for the promotion of electronic payments‚ which are secure and much more efficient‚"Volker said.
"As can be seen from the data‚ the average cheque value is R30 000 and there are far more effective ways of making larger value payments. The few users who have been making larger value cheque payments will no doubt see the benefits of using electronic payments‚ which also offer functionality such as audit trails‚ with increased management control for users‚" Volker concluded.