South Africa will open its payments system to non-bank operators, including telecoms firms, fintechs and retailers, from the middle of next year, a central bank official said on Friday, as part of a major overhaul of the system.
The change would end banks’ long-standing dominance of South Africa’s payments processing market, allowing non-bank firms to connect to the payments infrastructure, which clears and settles payments nationwide, rather than relying on banks as intermediaries.
The South African Reserve Bank (SARB) hopes the reform will spur competition, lower costs, broaden access to digital financial services and encourage innovation in a sector challenged by fintech companies and mobile-money providers such as MTN.
Pradeep Maharaj, the executive director of the SARB’s Payments Ecosystem Modernisation (PEM) programme, told a media roundtable that rules governing payment activities and exemptions would be published by next month.
Non-bank participants are expected to go live around March, after licensing, allowing time for testing and systems integration before a mid-year launch.
The reform is a key pillar of the central bank’s PEM programme, which aims to reduce reliance on cash and accelerate the adoption of affordable digital payments.
The SARB plans to modernise payment infrastructure, increase adoption of fast-payment services like PayShap and strengthen security and digital identity verification.
As part of the wider modernisation effort, the SARB has also proposed creating a national cash utility, a central bank-owned cash handling company, and introducing “white-label” ATMs operated as shared infrastructure rather than by individual banks, in a bid to lower cash-handling costs and preserve access to cash, particularly in rural and underserved areas.
Maharaj said the SARB expected to migrate its cash centres into the new cash utility next year and begin incorporating industry-owned centres, which would be bought by the utility, by the end of next year.
He added that a white-label ATM pilot would be launched in January, with the first batch of machines set to be rolled out nationwide by the end of next year.
- South Africa will allow non-bank operators such as telecoms firms, fintechs, and retailers to connect directly to its payments system starting mid-2024.
- The move aims to end banks' dominance in the payments market, promoting competition, lower costs, broader digital access, and innovation.
- The South African Reserve Bank will publish new payment rules and exemptions by next month, with non-bank participants expected to go live around March 2024 after licensing and testing.
- The SARB's Payments Ecosystem Modernisation programme seeks to reduce cash reliance, increase fast-payment adoption, and enhance security and digital identity verification.
- A national cash utility and white-label ATMs will be introduced, with the cash utility expected to begin operations next year and a white-label ATM pilot launching in January 2024.
