Big change to EFT payments in South Africa explained

The implementation of a significant change to cross-border payments between countries in the Common Monetary Area (CMA) has gone relatively well, with South Africa’s big banks focusing on communication to ensure a smooth transition.

Since 9 September, South African banks stopped processing domestic electronic funds transfer (EFT) credit payments and EFT debit collections to and from Lesotho, Eswatini and Namibia.

These countries, alongside South Africa, form part of the CMA, which links the four countries into a monetary union where a single monetary policy prevails.

The CMA has historically facilitated seamless cross-border transactions due to a shared monetary policy and the use of the South African rand as the region’s common currency.

However, treating these transactions as domestic payments has been deemed non-compliant with international regulations.

Therefore, this significant change is necessary to comply with international anti-money laundering and counter-terrorism financing (AML/CFT) standards.

To address this issue, regulators within the CMA have implemented new measures for cross-border payments, including EFTs and debit orders. 

From 9 September, low-value cross-border transactions started to be processed through a regional infrastructure payment system, eliminating the need for South African banks to handle them domestically.

This change has implications for South African account holders. They can no longer make EFT payments to accounts in other CMA countries or receive EFT payments from these countries. 

“To enhance compliance with international standards, our payment system and processes must be regularised,” the South African Reserve Bank (SARB) explained. 

“Doing so will, along with other benefits, prevent criminals from having easy access to EFT payments to launder funds and ensure this misuse can be identified more effectively when it occurs.”

The SARB explained that these transactions will now be considered cross-border and subject to enhanced due diligence requirements.

Daily Investor reached out to some of South Africa’s largest banks to find out how these changes have affected their operations. 

Absa said its customers are adjusting to the alternative method of transmitting and receiving funds from CMA countries and now receive these payments via the Society for Worldwide Interbank Financial Telecommunications (SWIFT).

SWIFT is the dominant secure global messaging system for cross-border payments between banks and other financial institutions. 

“While some of the challenges initially experienced pertain to customer understanding of the revised payment method, Absa has communicated with customers and provided advice on alternative methods,” the bank said. 

“We have also noticed higher call volumes relating to cross-border transfer queries, and we are ensuring our customers receive the highest levels of service and support across our channels.”

It said customers can send an email to [email protected] or contact the Absa Inward Payments contact centre on 0860 109 799 within 30 days of receipt of the payment.   

The bank explained that payments received with the required regulatory tag in the SWIFT message will automatically be credited to the customer’s account. 

“The standard process of receiving an international payment into an Absa account includes an auto-generated email notification informing the customer that they have received funds from abroad and that they can call the call centre,” Absa explained. 

“This email will always be sent to customers upon receipt of funds from abroad, including the CMA countries (Eswatini, Namibia, and Lesotho).”

Absa said its customers are adapting to the change, and the bank is committed to supporting its customers to navigate the adjusted payments process successfully. 

“Given the security considerations inherent in the regulatory change and efforts to ensure that the remittance ecosystem is secure and compliant with international standards, customers can also take comfort in the knowledge that their funds are protected,” the bank said. 

“We remain committed to ensuring that the financial system is safe and complies with all local and international standards.”

Standard Bank told Daily Investor that, under these new requirements, the bank is working to find ways to minimise the impact of these changes on its clients. 

“Standard Bank has communicated extensively regarding the transaction processing changes under the new payment rules,” the bank said. 

“Clients have been directed and advised to make use of alternate channels to fulfil a cross-border transaction.” 

“Should customers experience any challenges in making cross-border payments, they should contact the bank for further assistance.”

Daily Investor also reached out to Nedbank and FNB for comment, but did not receive a response by the time of publication.