South Africa’s forgotten economic backbone processes R584 billion every single day

The South African Multiple Option Settlement (SAMOS) system processes R584 billion on an average day, with 90% of value being settled in real time. 

This system, operated by the Payments Association of South Africa (PASA), is the forgotten backbone of South Africa’s National Payments System. 

Overseen and recognised by the Reserve Bank as the payment system operators, PASA is a non-profit. Its membership is made up of commercial banks and other authorised payment service providers. 

It is integral to the functioning of the country’s financial system and is also the system through which salaries are paid to South African workers. 

Created in the 1990s as part of South Africa’s national payment system strategy, the system has been significantly updated as the nature of transactions changed over time. 

SAMOS was first launched on 9 March 1998 as an electronic interbank funds transfer system to ensure guaranteed settlement largely in real time. 

The only transactions that are not real-time through the system are salaries and debit orders, which are often settled within a day, Reserve Bank deputy governor Rashad Cassim explained. 

Speaking to the Gordon Institute of Business Science, Cassim explained that much of the financial system in a modern economy is invisible and abstract. 

“We usually only focus on the institutions that we can see, like banks, insurers, and pension funds,” Cassim told attendees. 

“These different actors only interact in markets. Nowadays, most trading is electronic, so markets are a bit more abstract.” 

Cassim said the layer below that, where SAMOS and South Africa’s other 17 payment systems operate, is invisible to ordinary people. 

These financial market infrastructures are referred to as the plumbing of the financial system and move money and other assets between buyers and sellers. 

Without these invisible systems, a modern economy could not function. Salaries would not be received, shares and bonds would not be bought, and individuals could not even buy a can of Coca-Cola. 

This layer often gets overlooked. But it shouldn’t be. Not only is it systemically important, but it is also a space where some of the most exciting innovations are happening,” Cassim said. 

The bank is playing a greater role in this innovation. It has recently taken full control of Bankserv Africa, now PayInc, which is one of the largest clearing houses in Africa.

South Africa’s payments system

South Africa’s payments system is divided between large-value wholesale payments and low-value retail payments. 

Cassim explained that, for the Reserve Bank and other central banks, wholesale payments have always been a core responsibility. 

All of South Africa’s major banks have accounts with the Reserve Bank, which they use to pay each other and settle transactions. 

SAMOS facilitates these payments, processing R584 billion in payments daily, with 905 of value being settled in real time. Only 10% of the value settled on SAMOS is from retail payments.

This system has changed significantly over time as the Reserve Bank adopted new practices to minimise risk and improve liquidity. 

When it was first built, the system allowed banks to settle on a net basis. This was fine as long as interbank activity was relatively small. 

This method allows credit risk to build up during the day, increasing the chances of a participant failing before the end-of-day settlement. In this case, losses spread across participants and put the entire financial system at risk. 

Thus, the bank shifted towards gross settlement to enable more real-time payments and prevent risk from building. This is also why retail transactions are settled on net, as they have lower value. 

SAMOS is but one layer of transactions, with them first going through clearing houses where “the handshake” occurs. 

This is the first step of any transaction in South Africa, with the handshake being the process of transmitting, reconciling, and confirming payments between two different banks. 

In South Africa, retail clearing (EFTs, cards, ATMs) is managed by PayInc. This firm acts as a middleman, calculating how much Bank A owes Bank B. 

The transaction then moves to SAMOS, which is where the actual money changes hands to finalise the transaction. 

Under its real-time line, the moment Bank A initiates the transfer, SAMOS debits its account and credits Bank B’s account, for example. 

Once SAMOS marks a transaction as settled, it is legally final and irrevocable. It cannot be reversed. 

PayInc bundles millions of small, everyday transactions from card purchases and other payment methods into batches that are processed at designated times. 

It then sends the final bill to SAMOS, which shifts the aggregated bunched balance between the banks’ settlement accounts. 

This is how ordinary purchases, such as a cup of coffee, a PayShap transfer, or a meal for lunch, are settled. 

Recently, SAMOS successfully migrated to ISO 20022, a modern, globally uniform data standard. 

This upgrade allows financial institutions to attach richer data to every single payment instruction, making transactions more secure, transparent, and compatible with international cross-border systems.