South Africa is launching a new banking payment system this year – what it means for you

The South African Reserve Bank will launch its new Rapid Payments Programme (RPP) later this year.

In simple terms, it will give people the ability to make real-time payments using simple identifiers – like mobile numbers or e-mail addresses – to make transacting almost instantaneous. It is also expected to significantly speed up payment processing times.

“The highly anticipated modernisation of the country’s inter-banking payment system will not only boost financial inclusion but make it much easier, and cheaper, for consumers to pay both merchants and fellow consumers whilst boosting e-commerce sales,” said Andrew Springate, chief executive of financial gateway service provider PAYM8.

The project is in the implementation stage and barring unforeseen circumstances should be launched into pilot later this year. It supports the South African Reserve Bank’s (SARB) digital transformation journey and will enable users of the system to request payment from other users digitally in a simple and cost-effective way, he said.

“In South Africa, current estimates suggest that 53% of all point of sale purchases are still made in cash, while in the informal economy a staggering 89% of transactions are cash-based.

Not only is RPP good news for underbanked consumers who still rely on cash as their primary payment method, it also modernises the industry by creating new and exciting opportunities for merchants, SMEs, and e-commerce players alike.

“Similar systems have been piloted and launched elsewhere across the globe with massive success. The benefits are numerous and include stimulating economies by replacing cash usage, improving overall security all whilst providing a service as quick as cash.”

Arguably the biggest advantage of RPP is that it will provide a truly low-cost digital payment system for consumers, Springate said.

“It has the potential to free South Africans from high transaction fees, waiting in long bank queues at month-end, and waiting days to receive payments. RPP will also make paying debt easier with opportunities for instant instalment payments and payment arrangements via a mobile phone number. The more options consumers have at their disposal, the healthier the entire payments ecosystem becomes for all players.”

“RPP will hopefully bridge several major gaps among South Africa’s diverse population, including the rural/urban divide. Ensuring unbanked or underbanked consumers are financially included will increase competition amongst financial services providers which is critical for consumers who will for the first time enjoy affordable access to convenient payment mechanisms.”

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South Africa is launching a new banking payment system this year – what it means for you