Lerato Lamola | Partner | Webber Wentzel | mail me |
In meeting its policy commitments and addressing regulatory challenges posed by the rising prominence of non-bank payment operations, the South African Reserve Bank (SARB) published two draft documents in the first quarter of 2025.
In their policy document, colloquially referred to as Vision 2025, the SARB presents its vision for modernising South Africa’s National Payment System (NPS). The aim is to better integrate the South African economy with the rest of the world. They argue that creating an efficient, resilient, safe and cost-effective NPS requires certain amendments to the National Payment System Act. This need becomes particularly relevant when implementing modernised payment legislation and regulating technology use to improve payment efficiency and accessibility.
The two draft documents represent a first step towards achieving this goal. These initiatives form part of SARB’s regulatory steps to strengthen South Africa’s payment landscape.
Understanding the proposed payments legislation
Published under the existing regulatory frameworks, these draft documents serve as an interim measure. The first document, called the Draft Payment Activities Exemption Notice (Draft Exemption Notice), is set to be published under the Banks Act. The second, known as the Directive in Respect of Specific Payment Activities within the National Payment System (Draft Directive), will be published under the current National Payments System Act.
Amending legislation can take years. Therefore, these documents act as temporary solutions while SARB continues addressing larger amendments. Stakeholders should view these drafts as part of SARB’s regulatory steps to provide clarity and support to the payments industry during this period.
It is vital for role players to familiarise themselves with the draft documents. Doing so allows them to participate in the public consultation process, which will shape the final versions.
Stakeholders should carefully review the definitions in both drafts. Since the definitions are broad and may include unexpected business activities, financial institutions, online providers with in-built payment platforms, and other affected bodies should independently study both documents. Now is the time to determine whether your business activities fall within their scope and will be impacted.
Annexure A of the Draft Directive defines the following ‘payment activities’ as falling within scope:
Payment activity |
Definition and description |
| Acquiring of payment transaction | Contracting with a payee to accept and process payment transactions which result in a transfer of funds to the payee. |
| Card credit payment instructions | A payment instruction resulting in the credit of funds to a payment account linked to a card. |
| Electronic money | Electronically stored monetary value issued on receipt of funds and represented by a claim on the issuer, which is generally accepted as a means of payment by persons other than the issuer and is redeemable for physical cash or a deposit into a payment account on demand. This includes mobile money, where an electronic wallet service allows users to store, send and receive money using their mobile phone. |
| Execution of payment transactions | Execution of payment transactions, including transfers of funds on a payment account with the user’s payment service provider or another payment service provider. It includes the following subcategories:
|
| Faster payments | Providing an electronic service in which both the transmission of the payment message and the availability of funds to the payee occur in real time or near-real time, on a basis that the service is available 24 hours a day and 7 days a week. |
| Issuing of payment instruments | Contracting with a payer to provide a payment instrument to initiate a payment instruction. |
| Provision of a payment account or store of value | Providing an account or store of value held in the name of one or more payer or payee which is used for the execution of payment transactions. It includes the following subcategories:
|
| Provision of third-party payment | Subcategories:
|
| Money remittance | A service for the transmission of funds (or any representation of monetary value), with or without any payment accounts being created in the name of the payer or the payee, where:(a) funds are received from a payer for the sole purpose of transferring a corresponding amount to a payee or to another payment institution acting on behalf of the payee; or(b) funds are received on behalf of, and made available to, the payee. Subcategories:
|
| Clearing | The exchange of payment instructions. |
| Settlement | The discharge of settlement obligations. |
| Provision of a scheme | Providing a set of formal, standardised and common binding rules governing the relationship between payment institutions or members of a scheme to provide payment instruments for the transfer of funds, or making and receiving payments, between or by end users. |
| Participation in a scheme | Participation in a scheme as admitted by a scheme in terms of its entry and membership criteria |
Exemptions
Entities providing digital wallets have always ensured that their wallets do not engage in activities that could constitute accepting a deposit under the Banks Act. This precaution avoids licensing requirements under the Banks Act.
The Draft Exemption Notice clarifies this position. It exempts payment activities that involve pooling funds into a store of value or payment account from the definition of “the business of a bank” in the Banks Act. Digital wallet providers should read the Draft Exemption Notice carefully to assess whether the exemption applies to them.
The Draft Directive provides more exhaustive provisions. It regulates the payment activities listed in Annexure A. Businesses offering payment services should assess these activities to determine whether they fall within the Directive’s scope.
Importantly, market players must understand that the Draft Directive introduces requirements for governance, prudential criteria, data protection, regulatory reporting and licensing/authorisation. It also establishes fit and proper requirements for key personnel. Previously, payment providers had no capital requirements. Now, they must demonstrate sufficient capital when applying for SARB authorisation.
Additionally, the Draft Directive sets requirements for safeguarding and segregating client funds. It also addresses anti-money laundering compliance for payment providers. These measures represent further SARB’s regulatory steps aimed at strengthening oversight and protecting consumers.
Next steps for industry engagement
The public comment period for the draft documents closed on 16 April 2025. However, industry players should continue engaging with the SARB and National Treasury through industry bodies and future consultative processes. Since this represents only the first step in a wholesale amendment of the national payment system regulatory framework, more opportunities for engagement will arise.
Participation in public consultations helps ensure that the final regulatory instruments align with industry expectations. It also positions the national payment system to better unlock its potential in addressing policy goals set by regulators and National Treasury.
