Goodbye cash – Reserve Bank wants a big chunk of South Africa’s instant payment system
Update: BankservAfrica, now PayInc, has clarified that the SARB is only moving to acquire 50% of the group. This follows the Competition Commission’s announcement that it wanted sole control of the business.
The Reserve Bank is going all-in on its ambitions to make South Africa a cashless society, moving to acquire 50% of PayShap developer and processor, BankservAfrica.
The Competition Commission has recommended that the Competition Tribunal approve the acquisition of BankservAfrica by the South African Reserve Bank (SARB), without conditions.
According to the commission, the Reserve Bank moved to acquire sole control over BankservAfrica.
BankservAfrica, now PayInc, said that the commission misinterpreted the move, noting that the central bank only wants to subcribe to 50% of the company.
The SARB announced its intention to acquire 50% of the group in late 2024.
BankservAfrica is a payment clearing house system operator which controls the Automated Clearing Bureau Investments Johannesburg Pty Ltd.
Its core activity is delivering payment clearing and settlement services for South African financial institutions such as banks.
BankservAfrica’s payment systems also allow for interbank switching, clearing, and settlement. Its most notable brand under this umbrella is PayShap, which launched in 2023.
The Reserve Bank is constitutionally and statutorily mandated to protect the value of the South African rand in the interest of balanced and sustainable economic growth.
In addition to this, the central bank has a mandate to enhance and protect the financial stability in South Africa.
According to the Competition Commission, the SARB is responsible for managing the National Payment System (NPS), which is relevant to the acquisition.
The NPS includes all the systems, mechanisms, institutions, agreements, procedures, rules, and laws that come into play from the moment an end-user, using a payment instrument, issues an instruction to pay another person or a business to the final interbank settlement of the transaction in the central bank’s books.
The Reserve Bank’s move to acquire half of BankservAfrica is to bolster its efforts to modernise South Africa’s national payment system, making it more secure, inclusive and efficient.
As part of this modernisation process, BankservAfrica launched instant payment service PayShap in March 2023, with the Reserve Bank’s buy-in.
Since its launch, PayShap has facilitated over R285 billion in transactions and is supported and facilitated by 11 of the country’s major banks.
The system also feeds into the SARB’s wider ambition of steering South Africa into a cashless society.
The bank has long held that the country is over-reliant on physical cash and should transition to safer payment methods.
In 2024, the Reserve Bank published its Digital Payments Roadmap, which showed that almost half of South African adults withdraw all their money from their bank accounts as soon as it is deposited.
Reasons include a lack of trust in banks, fees associated with card transactions, and a lack of acceptance of cards by merchants in the informal economy.
However, with an accessible instant-payment platform like PayShap, digital payments are being rapidly adopted in areas of the economy once dominated by cash.
Reserve Bank governor Lesetja Kganyago previously noted that his aim is to reduce the use of cash in the local economy by modernising the NPS and educating South Africans at large on the benefits of digital payment channels.
Should the full acquisition of BankservAfrica be approved, the central bank will own half of the system, which would transition PayInc into a national Payments Utility through a collaboration with commercial bank shareholders.
The commission said it is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market.
The proposed transaction also does not raise significant public interest concerns, it said.
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