A financial upheaval will soon be in the making for South Africa. The South African Reserve Bank (SARB) has issued two draft policy proposals—the Draft Payment Activities Exemption Notice under the Banks Act and the Draft Directive on Specific Payment Activities under the National Payment System (NPS) Act—to develop the system and secure digital payments with regard to non-bank entities such as mobile wallets and fintech platforms.
So What’s Changing?
1. Broadening of the Definition of “Payment Activities”
- More than a dozen activities are now explicitly included—electronic money, faster payments, money remittance, issuing payment instruments, and clearing and settlement services. Hence, if non-bank entities are offering services like e-wallet, peer-to-peer transfers, or even closed-loop types such as gift cards, they might potentially come under the surveillance of SARB.
2. Interim Exemptions for Non-Banks
- The Draft Exemption Notice affords some temporary relief by exempting payment activities, including electronic money issuance and faster payments, from being called “banking business” under the Banks Act. In this way, certain non-bank entities may operate without a full banking license.
3. Prudential Standards for Payment Providers
- The Draft Directive imposes new requirements on banks and non-banks alike when conducting payment transactions. Among these requirements would be governance, capital sufficiency, safeguarding of client funds, fit-and-proper persons, and anti-money laundering procedures.
4. Closed-Loop Systems Now Regulated
- The Reserve Bank tightens regulation on closed-loop payment systems, which do not interoperate with other networks. Providers of such systems, for example gift card programs, will now be required to register with SARB, even if they are exempt under other provisions.
Why It Matters
- Consumer Safety & Trust: In essence, consumer confidence should be created by limiting payment fraud and thus strengthening the controls over all forms of digital and mobile payments in the mainstream.
- Level Playing Field: With such a change in place, non-banks will be governing bodies under a common framework, thus limiting arbitrage and providing fair competition to others in the market.
- Global Alignment: This Change is raised in order to align South Africa’s payments ecosystem to international standards for data protection, client-fund segregation, and prevention of financial crimes.
Also Read:SASSA July 2025 Payment Dates Confirmed: What To Expect This Month