Cheques Processing

A cheque written out, signed and handed to the receiving customer starts a physical journey, whilst a corresponding electronic transaction is generated and processed.

The receiving customer will deposit such cheque at their bank and expect to receive credit on the same day, even though a cheque is judged to be a promise to pay that is only fulfilled when the paying bank has confirmed the correctness and legality of the cheque as well as whether the paying customer has adequate funds to cover the amount of the cheque. In South Africa a customer is credited with the value of a cheque deposited on the date of the deposit. In most other countries credit is only applied once the paying bank has cleared the cheque.

Banks normally withhold access to the funds credited in this manner to safeguard against the possible unpaying and return of the cheque by the paying bank. To speed up the process, the information on a cheque is sent via an electronic information stream through an inter-bank operator and the physical cheque follows to serve as final confirmation of the mandate.

Upon receipt of the cheque at the branch of the paying customer’s bank, the cheque will be inspected to confirm the correctness of the details and the signature of the cheque. If a cheque is found to be flawed in terms of signature (mandate), the paying bank will return the transaction electronically to the depositing bank and the cheque will follow.

The maximum value payable per cheque is currently set at R5 000 000- (Five Million Rand). In instances where cheques for higher values are issued that will be cleared manually between the banks and the beneficiary's accounts will only be credited on completion of this process.

Rules affecting customers

The basic rules affecting customers are:

• Cheques must be completed in ink
• A cheque may not be altered
• Only legally acceptable crossings may be used
• Cheques must be completed in full
• Cheques must be signed by the authorised signatory/ies

There are more intricate principles that may be applicable to cheques at times. These can be found in the Bills of Exchange Act No 34 of 1964 (as amended).

Resolving problems

Customers with problems/disputes involving cheque transactions have to take such matters up with their own bank. It is important to note that a customer’s bank will only be able to deal with problems relating to the clearing of a cheque and not with the relationship between the two persons paying and being paid by cheque.