South Africa is preparing to shake up the digital banking environment as the South African Reserve Bank (SARB) embarks on a daring initiative to modernise the tests and payment ecosystem of the country. The Payment Ecosystem Modernisation (PEM) programme will phase out traditional methods such as EFTs and even instant payments in return for more efficient, cheaper and inclusive systems.
PEM is a roadmap aimed at modernizing the National Payments System (NPS) and addressing the inefficiencies of the existing payments system including high cost, limited access, long transfer times and outdated infrastructure. One particular area of concern indicated in the report is the sluggish uptake of PayShap, the fast payment platform recently launched for the purpose of improving instant payments by allowing users to send instant payments using mobile numbers as account aliases. While PayShap has great potential, lack of common fees, price clarity and inadequate user experience have stunted the uptake of the platform.
Why Replace EFTs and Instant Payments?
SARB states that there is definitely potential for enhancing options beyond EFTs and card payments. The aim is to facilitate fast and low cost digital payments that are universally accessible to everyone including unbanked and underbanked people. These advances could allow for payments that are feasible using only a phone number or QR code; thereby reducing the need for a bank account.
To facilitate this transition, SARB proposes a universal digital financial identity system, real time electronic KYC (Know Your Customer) verification and person-to-person payments based on aliases. For example email or mobile phone numbers.
Keep Reading
What Role Will SARB Play in the Transition?
The SARB will lead from the front by launching a National Payment Utility (NPU), a public good platform devoted to inclusion and innovation rather than profit. The SARB may even introduce its own low cost digital wallet, if necessary, to ensure that all South Africans have access to reliable digital financial tools.
