South Africa Is Introducing A New Banking Payment System This Year

 South Africa Is Introducing A New Banking Payment System This Year
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The South African Reserve Financial Institution is working on a new rapid payments programme (RPP) which is set to significantly shake up payments in South Africa. Led by BankServAfrica, together with Payments Association of South Africa (PASA) South Africa, the significant shift is the first of its kind in the country: it brings together the whole banking industry with a shared aim to widen and modernise the sector, including those that historically relied on cash as the main mode of payment. A major change is designed to build an easy, secure, instant payments ecosystem, which will enable individuals the option of making payments instantly using simple IDs like a mobile number or an email address.

In line with South Africas Reserve Banks Vision 2025 and the PASAs Future project, which is focused on the modernisation of the payments industry, A major change has been approved by a variety of public authorities, 11 leading banks, and the wider fintech sector. The plan, mentioned in the Central Banks Annual Report for 2022, forms part of the South African Reserve Banks Vision 2025 Plan as a payments-modernization initiative led by industry.

Importantly, the SARB Vision 2025 sets the goal to scale up digital payment options to serve all South Africans. This is a particularly crucial provision of the DFS to the unbanked: South Africa, unlike other countries on the African continent, has not been rapidly adopting mobile money. The SARB Strategy also stresses the importance of improving the security of the South African banking system with technology advances. Since no entities other than registered banks can accept deposits or issue electronic cash in South Africa, DFS providers are required to establish partnerships with banks in order to offer any form of financial transaction services. Partnerships with Fintechs and non-bank financial services are going to be more important to enhance a banks digital footprint, by enabling its customers to utilize different forms of payments.

While the effects of low-value, instant payments solutions can take a few years to play out, banks engagement and advocacy will be crucial to promoting the new payment systems amongst their customers. Because interoperability is such a key element of the rapid payments program, banks and other payment providers can reasonably expect pressure from regulators to integrate with the new solution. Banks should evaluate their payments infrastructure in light of Rapid Payments Program components.

As a result, millions of previously excluded and underserved poor customers are moving away from cash-only transactions and toward formal financial services payments, transfers, savings, loans, insurance, and even securities using their phones or other digital technologies for formal financial services–payments. While 80% of South Africans have a bank account, over 70% of all retail payments are still based on cash. In an age of digital banking, a crucially important factor is the fact that South Africas telecoms sector has a regulatory framework significantly weaker than the financial sector.

 

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