In meeting its policy commitments and addressing the regulatory challenges that come with the rising prominence of non-bank payment operations, the South African Reserve Bank (SARB) published two draft documents in the first quarter of 2025.
By Lerato Lamola, partner at Webber Wentzel
In their policy document, colloquially referred to as Vision 2025, the SARB lays out its thoughts on modernising South Africa’s national payment system (NPS), better enabling the integration of the South African economy with the rest of the world. They argue that to create an efficient, resilient, safe and cost-effective NPS, they visualise that certain amendments to the National Payment System Act are required.
This is particularly relevant when it comes to implementing modernised payment legislation, regulating and furthering the use of technology in improving payment efficiency and accessibility. The two draft documents are a first step towards meeting this goal.
Familiarise yourself with the proposed payments legislation
Published under the existing regulatory frameworks, these draft documents are an interim step. The first draft document is a draft exemption, namely, the Draft Payment Activities Exemption Notice (Draft Exemption Notice), which is set to be published under the Banks Act.
The other document is known as the Directive in respect of specific payment activities within the national payment system (Draft Directive) set to be published under the current National Payments System Act.
It’s important to understand that the process of amending legislation can take years and as such, these documents are intended to be an interim step pending the amendment of the National Payments System Act. These draft documents should therefore be seen as part of the SARB’s efforts to try to offer the payments industry a solution while it continues dealing with larger amendments to come.
It’s vital for role players to familiarise themselves with the draft documents while they still have an opportunity to take part in the public consultation process which will shape the final iterations of the draft documents.
Role players should familiarise themselves and engage with the definitions set out in the draft documents. As the definitions in both draft documents are broad for the activities which fall under ‘payment activities’ and may include unexpected business activities, we encourage financial institutions, online providers with inbuilt payment platforms or any other affected bodies to independently study both documents and assess if the draft documents inadvertently capture activities that should not be scoped in. Now is the time to determine whether your business or 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 payment instruction. |
| Provision of 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:
Financial Sector Regulation Act.
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| 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 |
Things to note
Entities that provide digital wallets (ie stores of value) have always been careful to ensure that their wallets would not provide for activities that could potentially constitute accepting a deposit as defined under the Banks Act and thereby require licensing under the Banks Act.
The Draft Exemption Notice attempts to clarify the position and exempts the payment activities as defined which involve the pooling of funds into a store of value or payment account from the definition of ‘the business of a bank‘ as set out in the Banks Act. It’s important for entities who provide digital wallets to read the Draft Exemption Notice’s definitions to assess whether they be covered by this proposed exemption.
The Draft Directive, which is more exhaustive in its provisions, intends to regulate the list of payments’ activities set out in Annexure A of the Draft Directive. Businesses that have a payment offering in their business are encouraged to assess the payment activities set out in Annexure A and determine if they would be captured within the scope of the Draft Directive.
Importantly, players in the market need to understand that this Draft Directive introduces requirements that deal with governance, prudential criteria, data protection, regulatory reporting and licensing/authorisation criteria. There are also fit and proper requirements for key persons. A material change to the regulatory regime is whereas, previously, payments providers didn’t have capital requirements, they will now need to prove, upon applying for SARB authorisation, that they hold the requisite capital.
The Draft Directive also lays out requirements around the safeguarding and segregating of client funds, and anti-money laundering (AML) compliance of payments providers.
Next steps
The public comment period for the draft documents closed on 16 April 2025. Industry players are encouraged to continue to engage with the SARB and National Treasury through their industry bodies and consultative processes as they become available. Since this is the first step in what will be the wholesale amendment of the national payment system regulatory framework, more opportunities to engage will become available.
Participation in the public consultation processes can help ensure that the final iteration of all the regulatory instruments is more closely aligned with industry expectations and better positioned to unlock the significant potential of the national payment system in addressing the policy goals set by the regulators and National Treasury.