Big change to payments in South Africa
South Africa will open its payments system to non-bank operators, including telecoms firms, fintechs and retailers, from mid-2027, a Reserve Bank official said on Friday, as part of a major overhaul of the system.
The change would end banks’ longstanding dominance of South Africa’s payments processing market.
It will allow non-bank firms to connect directly to the national 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.
It should also encourage innovation in a sector increasingly challenged by fintech companies and mobile-money providers such as MTN.
Pradeep Maharaj, executive director of SARB’s Payments Ecosystem Modernisation (PEM) programme, told a media roundtable that rules governing payment activities and exemptions would be published by November.
Non-bank participants are expected to go live around March 2027 following licensing, allowing time for testing and systems integration ahead of 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.
SARB plans to modernise payment infrastructure, increase adoption of fast-payment services such as PayShap, and strengthen security and digital identity verification.
Maharaj said the changes should lower transaction costs for small businesses and consumers, reduce cash dependence, and give unbanked and underserved consumers wider access to digital payments.
As part of the wider modernisation effort, SARB has also proposed establishing a national cash utility, a central bank-owned cash-handling company.
It will introduce “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 SARB expects to migrate its cash centres into the new cash utility in 2027 and begin incorporating industry-owned centres, which will be bought by the utility, by the end of next year.
He added that a white-label ATM pilot would launch in January, with the first batch of machines set to roll out nationwide by the end of next year.
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This is a total recipe for disaster. The opportunities for scammers and money launderers will be unlimited.
As a former Banking IT Exec I can tell you that although our banks are expensive, they are world class and do provide a solid barrier to exchange controls in most cases.
South Africa has been praised by ratings agencies for our banking systems, and this is something the reserve bank and government should stay out of.
But then, this is just my opinion and observation.