BANKING

Reserve Bank launching new payment system for South Africa soon

The South African Reserve Bank (SARB) will soon launch a new payment service called PayShap to accelerate the country’s shift to a cashless society.

The rapid payment program (RPP) is an instant payment service allowing customers to transact without a banking number.

The payment service will be similar to an electronic funds transfer. However, users will be able to use instant messaging applications like WhatsApp to exchange funds, said Neha Kumar, head of product partnerships at Stitch.

“Payments will be made to a bank account or a proxy, such as a mobile phone number, linked to an account or wallet at any bank,” Kumar said.

“Payments can be made from a mobile phone at a low fee to the consumer, in real-time, and is available 24/7.”

The use case for physical cash will be diminished, and cashless transactions will become more accessible and widespread.

PayShap will initially only be used for small-value transactions to a maximum value of R3,000, according to Kumar.

The system is still in the early testing stages. It’s expected to soft launch with four initial pilots in March 2023 and continue rollout throughout the year.

The first cohort will consist of four banks – Absa, Nedbank, FNB, and Standard Bank – with more intending to go live later this year.

Opportunities and competition

The full implementation of RPP means that cashless transactions will become more accessible and widespread, broadening access to financial services and growing the market.

Sameer Singh, a research analyst at Old Mutual Wealth, said that RPP would “drive competition for share of customer wallets and provide opportunities for creative digital solutions to serve the country’s large underbanked market”.

Fintech firms that adopt and integrate RPP into their solutions will erode barriers to financial inclusion by reducing the high cost of account ownership and addressing the lack of physical bank outlets.

Twelve banks have shown a commitment to PayShap, and four will be among the first cohort – Absa, Nedbank, FNB, and Standard Bank.

Market analysts expect the ongoing transformation of payment systems to introduce efficiencies and scale for large banks and retailers.

“We expect many opportunities for growth as banks and non-banks compete for a larger share of consumers’ financial transactions,” said Singh.

Reserve Bank testing new payment system in South Africa – launching this year

Taking after Pix

PayShap can be compared to Pix, the instant payments platform developed by Brazil’s Central Bank, which launched in 2020 and has had a marked impact on financial inclusion and the growth of e-commerce in the region, said Kumar.

More than half the Brazilian population has made a Pix transaction.

BankservAfrica hopes that PayShap could also begin to displace cash from the South African economy.

This article was first published on Daily Investor and republished with permission. Read the original here.


Read: The Reserve Bank isn’t taking any prisoners

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