Reserve Bank’s big move to go cashless in South Africa
BankservAfrica has announced that the South African Reserve Bank (SARB) intends to acquire 50% of the clearing house as part of its move to boost cashless payments in the country.
The deal is an initiative with commercial banks to transform South Africa’s digital payments ecosystem and to transition BankservAfrica into a national payments utility.
“Whilst still subject to the conclusion of the detailed transaction agreements and regulatory approvals, this strategic partnership seeks to bolster efforts to modernise South Africa’s national payment system, making the payment system more secure, inclusive and efficient,” BankservAfrica said.
“Our role has always been to provide essential payment services to financial institutions. This consequential partnership between the company, its commercial bank shareholders and the SARB, signifies both a continuation and expansion of that role as we focus more deliberately on financial inclusion through affordable access to modern payment capabilities.”
It said that more details of the intended transaction will be made public once the contractual and regulatory processes have been finalised.
A foundational offering of the envisioned payments utility is PayShap, a service launched by BankservAfrica in March 2023 that allows South Africans to make instant payments.
Growing rapidly with more than 1 million transactions per day, PayShap enables more accessible, convenient and secure payments for everyday transactions.
PayShap is a real-time, low-value, interbank digital payments service. It is already available through Absa, Nedbank, Standard Bank, FNB, Capitec, and Discovery Bank.
In April 2024, MTN South Africa partnered with Investec and Electrum to bring PayShap to its MTN Mobile Money (MoMo) service.
Since its launch in March 2023, the broader payments industry has processed over 74.2 million PayShap transactions worth a combined R46 billion.
Going cashless
The SARB and other stakeholders, including the Consumer Goods Council of South Africa, have made a concerted effort to eliminate cash in South Africa and move to safer digital payment methods.
Cash still reigns supreme in South Africa. BankservAfrica recently noted nine out of ten transactions in South Africa are still made in cash.
It further revealed that 95% of informal small business customers and 63% of formal business customers opt to pay in cash.
However, this has proven to be a headache for the Reserve Bank, which is trying to make the country’s economy cashless and safer.
Reserve Bank Governor Lesetja Kganyago said South Africans are over-reliant on physical cash and should transition to safer payment methods.
Part of the plan is modernising the national payment system and educating people on the benefits of digital payment channels.
The Reserve Bank’s Digital Payments Roadmap shows that almost half of South African adults withdraw all their money from their bank accounts as soon as it is deposited.
Reasons for this include a lack of trust in banks, fees associated with card transactions, and merchants’ lack of acceptance of cards in the informal economy.
Despite this, the SARB expects consumers to have increased trust in and familiarity with electronic payment systems by 2025, which underpins its drive and new vision for payments in the country.
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