The South African Reserve Bank (SARB) has launched a new payment service called PayShap to accelerate the country’s shift to a cashless society.
The rapid payment program (RPP) is an instant payment service allowing customers to transact using their phone numbers.
Fundi Tshazibana, the deputy governor of the South African Reserve Bank (SARB) said that PayShap is an opportunity to reduce transaction costs and build trust in digital payment methods.
“Whether it’s a R50 note in your hand in your hand or your bank account, we want to start getting the same look and feel,” she said.
The fact that PayShap transactions are instant means it is a cash equivalent, without the drawbacks of holding physical cash. PayShap transactions should clear within 10 seconds.
PayShap can be compared to Pix, the instant payments platform developed by Brazil’s Central Bank, which launched in 2020. It is used by more than half the Brazilian population.
Brazilian authorities considered suspending the service owing to a rise in transaction-related crime. However, that did not happen.
Nedbank, Absa, FNB and Standard Bank
Four banks started with PayShap today – Nedbank, Absa, FNB and Standard Bank.
Clients of these banks should see the feature on their banking app from today.
There are plans to get more banks on board down the line with Capitec, Investec, Discovery, Sasfin, Standard Chartered and Thyme bank coming on as the second cohort.
The PayShap platform is a product of collaboration between banks and other shareholders that will enable instant transactions as banks will use the same technology to make transactions through PayShap.
This will reduce the time taken for transactions between clients using different banks.
While banks fiercely compete with each other, “in payments we knew that we had to collaborate”, said Rufaida Ranoobhai, head of the South African payment division at Standard Bank.
Ranoobhai said that PayShap allows for collaboration and agreement on certain procedures while creating spaces in the payments ecosystem where the banks can compete.
Risk of fraud
Mpho Sadiki, head of real-time payments at Bankserv Africa, said you will always think about financial crime and fraud when designing a payment system.
While fraud will never be eradicated, he said that the controls in place in the system would keep PayShap one step ahead of the fraudsters.
He also emphasized that the stakeholders will be vigilant in monitoring the ways in which the platform is used for fraud and proactively combating fraudsters.
Dayalan Govender, managing executive of solution innovation at Nedbank, told Daily Investor that their data indicate that the increased tax oversight that will come from transacting through PayShap shouldn’t affect uptake too significantly.
He said that people want a “frictionless” payment experience and that there is a hunger for adopting digital payment technology.
The banks involved will be free to set the rate they want to charge per transaction.
Govender told Daily Investor that Nedbank would initially charge R0 on transactions and will introduce a R1 fee per transaction at the end of April.
Govender said getting clients to trust PayShap will “underpin” the service.
Tshazibana echoed these sentiments, saying PayShap represents an opportunity to build trust in financial systems and lower transaction costs.
She said the SARB would not be involved with pricing but will ensure that the system is safe to use for consumers.
The Financial Sector Conduct Authority will also have oversight powers for the transaction service.