Cheque limit reduction

[Dave A]

I have received this notification from Standard Bank:
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The South African Reserve Bank has issued a directive to decrease the maximum limit of a cheque that can be issued, deposited or cashed, from R500,000 to R50,000, with effect from 1 May 2020.

Please note that from this date, Standard Bank will no longer accept cheques above this value, and any presented above this value will be returned with reason code "Cheque value exceeds the maximum amount". Cheques which are split to bypass this maximum value will also not be allowed. The following alternatives are available to you to perform your transactions: Payments can be done on Business On Line
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That is no trivial reduction in the cheque limit

Why is the Reserve Bank so interested in limiting the value of cheques, though?

[Andromeda]

It seems PASA came up with this plan in July last year already.

“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. A reduced cheque limit will thus reduce the risks associated with fraud losses and system failures,” says Volker

[GCE]

This is an interesting one
We had a contract where the developer only pays by check which was limited to 500K - He has to pay the builder by the 30th of the month to avoid interest - He pays the builder 7 Bar with 14 checks each made out at 500K - No interest can be charged as the builder picks up the checks on the 30th and technically has been paid - Builder can only deposit one check a day and so 14 days later we get paid .

At 50K limit , best I avoid pricing any of his developments - or maybe he will now be forced to go EFT and he can no longer delay payments through a technicality

[Dave A]

No interest can be charged as the builder picks up the checks on the 30th and technically has been paid - Builder can only deposit one check a day and so 14 days later we get paid .

Add the time it takes for the cheque to clear in thinking about that timeline

Actually, on balance I'm pleased cheques are being sidelined. About the only real upside with receiving them was the ability to twist a slow payer's arm to give you a series of post dated cheques.

When it came to the issuing side, one benefit was control through requiring multiple signatories. Nowadays there are digital solutions to that control that are just as effective - perhaps even more so. The other was the time it took for a cheque to finally land... (like Graham's situation above).

We can't be far from cheques disappearing completely at this rate.

[ians]

Add the time it takes for the cheque to clear in thinking about that timeline

Actually, on balance I'm pleased cheques are being sidelined. About the only real upside with receiving them was the ability to twist a slow payer's arm to give you a series of post dated cheques.

When it came to the issuing side, one benefit was control through requiring multiple signatories. Nowadays there are digital solutions to that control that are just as effective - perhaps even more so. The other was the time it took for a cheque to finally land... (like Graham's situation above).

We can't be far from cheques disappearing completely at this rate.

I remember going around in the evenings to collect cheques (28 years ago) ...then standing with my deposit book in a line at the bank to deposit... back then I had special clearance on cheques ...so there was no 14 day waiting period.

The last cheque i received was about 3 years ago...a customer who had also been operating for around 20 years (company closed down 3 years ago)\

I had a cheque book in my draw until about a year ago...it got shredded.

[Andromeda]

A client used to regularly receive post dated cheques from a well know company. For the best part of a decade there was never ever a problem, and the cheques were always signed by a director.

Last year one of the cheques bounced and although there were a few subsequent orders, the director gave them the run around like you can't believe. A bounced "Not transferable" cheque correctly made out to a named person or entity constitutes fraud, I am told.

My client handed the matter over to an attorney in Pretoria and within 2 weeks had the cheque amount paid by eft, as well as legal expenses. The amount was about what the limit is now, but the real weird thing was that this happened in 2019! I seriously thought almost nobody used cheques anymore.

Having said that, most clients have an almost unused or slightly used 200 page cheque book in the safe.

[kumarip]

Good information.