The National Payment System in South Africa: What It Means for Small Businesses

South Africa leads in digital funds. This is mirrored within the quite a few financial technology improvements born within the nation. Among these are challenger fee suppliers driving prompt funds and recurring fee fashions – and companies are eagerly adopting them. Yet, the National Payment System has not fairly stored tempo with technological development, leaving this sector outdated and ungoverned to a level, whereas entrepreneurs cope with bottlenecks and vulnerabilities. Thankfully, that is altering.

Challenger fee suppliers are outlined as digital-first financial technology corporations that compete with conventional banks. In South Africa, this implies they’re giving the Big Five Banks a run for his or her cash by providing sooner, cheaper, and extra versatile methods to ship, obtain, and course of funds.

The downside is that the National Payment System (NPS), the community of legal guidelines, guidelines, applied sciences, and establishments that allow secure transactions in South Africa, was by no means set as much as embody fee suppliers.

The National Payment System Act 78 of 1998 gives the authorized framework for managing, regulating, and supervising fee, clearing, and settlement programs in South Africa, and the South African Reserve Bank Act 90 of 1989 empowers the SARB to supervise these programs. Both items of laws use phrases like “financial institution”, “industry of a financial institution” or “deposit” – language that doesn’t match digital fee suppliers.

In early 2025, the SARB put forward draft legislation to amend this wording and broaden its definitions. But this isn’t the fast repair it appears to be for fee suppliers. To make sure the inclusivity that the NPS is meant to supply digital fee suppliers in addition to conventional monetary establishments, the Association of South African Payment Providers (ASAPP), an trade affiliation for financial technology fee suppliers and different contributors, is enabling key function gamers to place ahead sensible proposals of their very own.

These contributions will form the way forward for the nation’s fee system.

What is the National Payment System in South Africa and How Does it Affect Small Businesses?

Electronic funds in South Africa are widely used by consumers and businesses alike. From prompt on-line funds through EFT in South Africa to real-time funds like PayShap and card funds, South Africans are spoilt for selection when deciding on fee options for small companies in South Africa.

Here are some statistics that put fee strategies for small companies in South Africa into perspective:

Roughly R167 trillion price of transactions were completed within the payment systems in South Africa throughout 2025. Additionally, roughly 507 million transactions had been accomplished through PayShap, amounting to a complete worth of R486 billion. Card funds at POS amounted to R1,9 trillion.

Entrepreneurs can’t keep away from adopting an digital fee system in South Africa. To thrive, companies want dependable fee strategies for small companies in South Africa, guaranteeing buyers have a number of handy fee choices whereas sustaining safety. With this in thoughts, financial technology fee suppliers have stuffed the hole, providing digital wallets, fee gateways, and point-of-sale programs. These establishments play a key function in constructing an accessible, aggressive, and progressive funds ecosystem.

But companies are additionally paying a toll in responding to the rise in digital funds: Interchange charges are paid between monetary establishments on card transactions. Payment prices add up and have an effect on not solely the buyer however the service provider too.

ASAPP has submitted two Cost of Payments and Interchange papers to the SARB, which have been included within the Interchange Determination Project.

“ASAPP helps decrease interchange on client card transactions, decided via a clear and evidence-based methodology,” says Lincoln Mali, Chairman of ASAPP. “The methodology ought to take into account the price to retailers of accepting digital funds, the impact of interchange on service provider acceptance, and South Africa’s transition from money to digital funds.”

Mali provides that the evaluation also needs to take into account the complete price of card acceptance, together with scheme charges, incentives, rebates, and routing preparations. “Any financial savings achieved ought to attain retailers and shoppers.”

Because a service provider’s payment-acceptance price contains interchange, scheme charges, buying and processing fees, transport systems prices, units, and fraud-related prices, all fees have to be investigated. “A discount in anyone part doesn’t routinely scale back the service provider’s complete price.

“The Authorisation Framework ought to permit extra suppliers to compete for retailers. As retailers develop into extra accustomed to digital funds and have a wider selection of suppliers, competitors ought to proceed to accentuate. This aggressive course of ought to assist make sure that price efficiencies are mirrored within the companies and costs provided to retailers and shoppers,” he explains.

Furthermore, Mali clarifies that interchange and scheme charges are centrally decided or unilaterally set, and the events paying them have restricted skill to affect them via unusual competitors. “ASAPP due to this fact helps larger transparency and acceptable regulatory oversight of those wholesale charges, together with direct intervention the place charges are disproportionate or are usually not constrained by competitors.

“ASAPP’s view is that the complete payment-cost stack needs to be clear and reviewed collectively. Low-value PayShap transactions needs to be free to shoppers, service provider pricing needs to be clear, and reductions in wholesale prices needs to be mirrored within the costs charged additional down the fee chain.”

PayShap for Business: Expanding Merchant Acceptance

ASAPP has additionally developed and submitted a proposal to the SARB’s National Payment System Department on PayShap service provider acceptance and interoperability.

“We need to encourage increasing PayShap service provider acceptance, however the primary barrier is the absence of a easy, broadly obtainable, and commercially viable means for retailers to just accept PayShap on the level of sale,” Mali explains.

He argues that retailers ought to have the ability to settle for PayShap via acquainted transport systems, together with present terminals and interoperable QR codes, with out having to help separate programs for various suppliers. “Consistent performance, a recognisable PayShap model, clear pricing, and clear guidelines for refunds, reversals, disputes, and settlement will even be wanted.

“For low-value funds, the price should make sense in comparison with money.”

What is the Role of SARB within the National Payment System and Authorisation?

Under the draft Authorisation Framework, financial technology fee suppliers will have the ability to apply on to the SARB for approval to:

• situation e-money and fee devices;
• purchase fee directions;
• provoke funds;
• present third-party fee companies;
• present home money-remittance companies;
• function fee schemes;
• clear fee directions; and
• take part in settlement preparations the place the relevant necessities are met.

“A financial technology fee supplier will due to this fact have the ability to present an authorised fee service straight with out requiring a financial institution sponsor merely to conduct that exercise.

Where clearing and settlement are required, the supplier could appoint a sponsoring participant or apply for direct participation. Direct clearing and settlement will due to this fact depend upon the supplier assembly the related designation, membership, capital, technical, operational, and risk-management necessities,” Mali continues.

Large banks are prone to have fewer sponsorship preparations as qualifying financial technology fee suppliers transfer to direct participation, though sponsorship will stay related for suppliers that select, or want, to make use of it.

“A broader vary of suppliers contributing to digitisation may broaden the general digital-payments market. This can carry extra shoppers and retailers into digital funds, enhance transaction volumes, and create alternatives for financial technology fee suppliers and incumbent establishments. Growth in digital funds can due to this fact profit the broader ecosystem,” he says. This is essential as a result of considered one of ASAPP’s objectives is to encourage wider adoption of digital funds in South Africa.

What Do Legislative Changes Mean for Payment Gateways, BNPL Providers, and Cross-Border Payment Solutions?

In brief, the impact will depend upon the actions carried out beneath every industry mannequin.

“A fee gateway offering solely technical connectivity could not require authorisation beneath the framework. A gateway that additionally acquires fee directions, initiates funds, points e-money, gives third-party fee companies, or performs one other listed fee exercise will want the related SARB approval,” he notes.

“For BNPL suppliers, the credit score part will proceed to be ruled by the relevant credit score and consumer-protection necessities. Any fee exercise carried out as a part of the service should be assessed individually beneath the fee regulatory framework.”

Mali explains that direct authorisation could scale back sponsorship prices, operational dependence, intermediation, and counterparty danger. “The extent of the profit will depend upon the supplier’s mannequin, the fee exercise carried out, and whether or not it makes use of a sponsor or applies for direct clearing and settlement participation.”

Authorisation Framework and Banks Act Exemption Notice solely apply to home fee actions. “Cross-border suppliers stay topic to the relevant trade management, FinSurv, NPSD, anti-money laundering, sanctions, and different cross-border fee necessities,” he states.

Anti-Fraud and Cybersecurity in Digital Payment Systems

The digital fee trade should steadiness elevated interoperability with the mandatory safety and fraud-prevention measures.

“ASAPP helps interoperability and safety being developed collectively. Common technical and safety requirements, affirmation of payee, safe digital id, fraud-intelligence sharing, and clear legal responsibility guidelines can enhance safety throughout the fee system,” Mali elaborates.

“Interoperability ought to make it simpler for contributors to trade related data and coordinate their response to fraud. When data strikes effectively throughout the ecosystem, suspicious patterns could be recognized earlier, contributors can act extra shortly, and classes from incidents could be shared extra broadly.

ASAPP additionally helps risk-based controls that permit further verification, transaction holds, or limits the place knowledge signifies a better danger, whereas permitting lower-risk funds to stay fast and easy. “Banks and appropriately regulated financial technology fee suppliers ought to have the ability to contribute to and act on related fraud intelligence. This should happen inside acceptable privateness, authorized, safety, and governance necessities. Shared companies should even have acceptable resilience, restoration, and fallback preparations.”

As a part of its strategic positions, ASAPP advocates for shared fraud intelligence, affirmation of payee, safe and reusable digital id, clear legal responsibility guidelines, and constant customer-protection requirements.

ASAPP additionally helps banks and appropriately regulated financial technology fee suppliers having equitable entry to related fraud intelligence and prevention capabilities. Merchants ought to obtain well timed warnings and sensible help when fraud patterns emerge.

“Participants ought to keep acceptable cyber and operational resilience, together with controls addressing third-party suppliers, shared transport systems, cloud companies, focus danger, incident response, restoration, and repair continuity,” he highlights.

“Fraud incessantly crosses institutional and payment-channel boundaries. Effective prevention requires coordinated motion by banks, financial technology fee suppliers, regulators, telecommunications suppliers, law-enforcement our bodies, and different related contributors,” Mali concludes.