🇿🇦 Payments in South Africa

The framework: a central bank that operates as much as it regulates

The South African Reserve Bank (SARB) is South Africa’s central bank. It writes the payment system rules, runs the domestic RTGS, operates the regional RTGS for 16 countries, and, since 2025, owns half of the retail clearing house. Few central banks combine all four roles. A company looking for the relevant authority on any South African payment acceptance question therefore always ends up at the same institution, whether the issue is licensing, access to settlement, or a challenge to a clearing rule.

The national payment system rests on two statutes. Section 10(1)(c)(i) of the South African Reserve Bank Act 90 of 1989 tasks the central bank with establishing and conducting clearing and settlement systems. The National Payment System Act 78 of 1998, published in Government Gazette 19402 on October 28, 1998, gives the central bank responsibility for managing, administering, regulating, and supervising the national payment system, or NPS (SARB, NPS Vision 2030+ Consultation Paper, February 2026). These two laws alone establish the SARB’s authority over payments, and every South African payment requirement traces back to them.

Self-regulation is the third layer of the framework, alongside the law and the central bank, and it is being dismantled. The Payments Association of South Africa (PASA), recognized by the SARB as a payment system management body (PSMB), sets the clearing house rules, admits participants, and imposes sanctions. The upcoming NPS Bill abolishes the PSMB model. The SARB has set up a PSMB Transitional Committee to reallocate PASA’s functions. They will go to the central bank itself, clearing house operators, an industry body, and other organizations (SARB, National Payment System Regulatory and Oversight Report, 2024/25). A contract that names PASA as the rule-making authority may therefore no longer point to the right party once those functions have moved.

PayShap: three flat years, then the breakout

PayShap is South Africa’s instant credit transfer system. Launched in March 2023, it is built on the ISO 20022 standard and operated by PayInc. It uses the ShapID for addressing, an alias built from the payee’s phone number and bank, in the form 072xxxxxxx@bank. An account number still works as an identifier. Funds reach the payee within seconds, at any hour of the day or night.

Adoption stayed low for three years because of pricing. Banks charged for every PayShap transaction, while EFT was free and cash was everywhere. A paid instant rail was competing with two payment methods that cost users nothing they could see. The SARB listed the under-adoption of the fast payment system among the problems its modernization program must fix (SARB, Payments Ecosystem Modernisation, 2026). Volumes jumped by an order of magnitude in the first five months of 2026.

RTC and EFT: the credit stack PayShap did not replace

South Africa has three credit transfer rails. PayShap was added to the two existing systems without replacing either. EFT credit is the original bulk transfer: cleared in batches, cheap, and slow. RTC has offered near-instant credit since 2006, but its price has confined it to large amounts, while PayShap covers small instant payments. EFT credit still carries by far the most value of the three.

Checks were withdrawn from the South African payment system effective December 31, 2020. The decision was made jointly by the SARB, the Financial Sector Conduct Authority, PASA, and the Banking Association South Africa (SARB, Digital Payments Roadmap, April 2024). The reasons given were processing times, fraud, cost, limited acceptance, and declining use. South Africa thus scrapped an instrument that several developed markets still keep in circulation.

The debit order, its abuse, and the DebiCheck fix

The debit order is South Africa’s direct debit: a creditor instructs the payer’s bank to debit the payer’s account. It is used for insurance, consumer credit, subscriptions, and school fees. For years it also fueled an industry of abusive collections. At the time, mandates were not registered anywhere at the payer’s bank. The bank had no reference to check that a collection matched a real commitment. A collector could submit whatever amounts and frequencies it chose without producing an enforceable mandate.

A race to be first in the queue grew on top of this setup. Early debit orders were submitted ahead of every other flow, starting on payday, to grab the balance first. Disputes rose sharply. Banks refunded, collectors resubmitted in the next cycle, and payers lost control over the order in which their accounts were debited. DebiCheck was introduced in response: the payer authenticates the mandate with their own bank when signing the contract. Without an authenticated mandate, the payer can still dispute the collection, and the creditor has no proof of agreement to counter the dispute.

The Registered Mandate Service (RMS) was a transitional arrangement for creditors whose payers had not responded to the DebiCheck request. RMS initiations fell 5% in 2024 to 9.5 million, precisely because DebiCheck authentication had improved (SARB, 2024/25). The Registered Mandate (RM) replaced it on May 12, 2025 as a stand-alone payment system, moving from the morning window to an evening window. Nothing carried over automatically: a mandate signed under the old service does not migrate to the new one on its own.

Cards: the dominant rail, with costs set by the central bank

South Africa is Africa’s largest card market. Card purchases made up 65% of retail payment volume in 2022 (SARB, Digital Payments Roadmap, April 2024). There is no domestic scheme: Visa and Mastercard account for almost all issuing and acquiring. Only locally licensed firms can access the market, because Directive 1 of 2020 bars foreign issuers and acquirers not licensed under South African law from issuing or acquiring domestic cards.

South African interchange is set by the central bank itself, following the Interchange Determination Project launched in 2011. This differs from the European model, where the schemes set the rates and a regulation then caps them. The card phase concluded in 2014, used a cost-based methodology, and replaced the three rates then in force with 12 rates. Those rates have applied since January 1, 2015 (SARB, Interchange Determination Project, Phase 2, card results, 2014).

Cash: massive, costly, and now officially accepted

Cash underpins the everyday economy for a large share of South Africans, including many who are paid electronically. In its Roadmap, the SARB puts it plainly: cash remains king. The documented pattern is the pass-through account: money comes in and goes straight back out.

The annual cost of cash splits almost evenly into two categories. Direct costs (withdrawal and deposit fees) come to about ZAR 43.5 billion, or 49%. Indirect costs reach about ZAR 46.1 billion, covering travel and waiting time, crime and losses, opportunity cost, and costs passed on by merchants (SARB, Cost of Cash Study, November 2025). These costs fall hardest on low-income households. Cash is not free for its users. They pay in time, theft risk, and higher prices rather than in a line item on a bank statement.

Withdrawal statistics point the other way. ATM transactions fell from 509.4 million in 2023 to 289.4 million in 2024 (SARB, NPS Regulatory and Oversight Report, 2024/25). The central bank sees this as a shift to digital. The ATM network is also being consolidated, which explains why white-label ATMs feature in the Cash Smart strategy. The decline is in the number of transactions, not in demand for cash: as access points thin out, people may take the same amount in one withdrawal instead of several.

Inclusion: 96% have accounts, 19% use them weekly

Formal inclusion means holding at least one regulated financial product: insurance, payments, savings, or credit. South Africa’s formally included population rose from 91% in 2021 to 96% in 2022, and its banked population from 81% to 82% (FinScope, cited by the SARB, April 2024). Few emerging markets reach that level. But these rates measure ownership of a product, not its use, and in South Africa the two diverge sharply.

Social grants play a major role in retail payment flows. South Africa’s grant system reaches more than 11 million people and benefits more than 40% of households. At the end of December 2021, the South African Social Security Agency (SASSA) had 11,550,605 beneficiaries. 63% (7,285,934) were paid through the South African Post Office and 37% (about 4,264,671) into a commercial bank account (SASSA, Annual Performance Plan 2022-23, cited by the SARB). Grant payment day brings the month’s peak in withdrawals, and that spike is visible across all retail flows.

Digital payments require mobile data, and its price is a real constraint in South Africa. In 2022, a gigabyte cost up to ZAR 85 in South Africa, compared with $1.53 in North Africa and $2.24 in Western Europe (SARB, Digital Payments Roadmap, April 2024). The Competition Commission had already found, in its Data Services Market Inquiry of December 2, 2019, that poor consumers paid inexplicably more per megabyte than wealthy ones. A payment app that eats into a data bundle becomes unusable as soon as the bundle runs out, which shuts out part of the very population it targets.

The regional picture: the rand as southern Africa’s settlement currency

SADC-RTGS, formerly SIRESS, is southern Africa’s gross settlement system, operated by the SARB since 2013 on behalf of the SADC Committee of Central Bank Governors. It settled in rand, and only in rand, until the Angolan kwanza joined on July 27, 2026. Sixteen countries participate: South Africa, Angola, Botswana, Comoros, the DRC, Eswatini, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, Tanzania, Zambia, and Zimbabwe (SARB, SADC-RTGS page, 2026). The rand therefore remains the de facto settlement currency for high-value payments in southern Africa, even for transactions in which neither party is South African.

• 88 participants connected to SADC-RTGS as of March 31, 2025, including 9 South African and 14 Zimbabwean participants (SARB, NPS Regulatory and Oversight Report, 2024/25).
• October 2024: Common Monetary Area flows (South Africa, Eswatini, Lesotho, Namibia) migrate to SADC-RTGS. The April 2024–March 2025 financial year is the best in the system’s history.
• TCIB (Transactions Cleared on an Immediate Basis), operated by PayInc since 2021, is its retail counterpart: low-value cross-border push credits, cleared immediately and settled later.

Amendments to FATF Recommendation 16 went out for consultation in February 2025, followed by industry discussions in March 2025. Once adopted, they will require a revision of Directive 1 of 2022, which applies those requirements to the national payment system. The corridors linking South Africa to Zimbabwe, Malawi, and Mozambique therefore face changes to identification requirements soon. Informal flows in these corridors are huge, and TCIB was built to bring them into the formal system.

Operating in South Africa: the regulatory calendar and what to do

South Africa has launched its biggest payments overhaul since 1998, with three workstreams moving in parallel. The NPS Bill rewrites the law, the PEM program (Payments Ecosystem Modernisation) delivers the technical and institutional modernization, and Vision 2030+ prepares the next strategic cycle. Their timelines overlap, so a project launched today will see the legal framework, the clearing infrastructure, and industry priorities change one after another.

Until now, direct access to the payment system has been reserved for institutions with a banking license. The NPS Bill, sponsored by National Treasury with SARB support, is meant to open it to non-banks. Until the bill becomes law, the central bank has prepared an exemption from the Banks Act 94 of 1990. It removes certain payment activities from the definition of the business of a bank and places them under a dedicated regulatory and supervisory framework. The exemption and its framework went out for consultation in March 2025 (SARB, NPS Regulatory and Oversight Report, 2024/25). Before the new law takes effect, this exemption is the fastest route to direct access for a non-bank provider.

• Pin down your status first: bank, System Operator, Third Party Payment Provider, or user of the Banks Act exemption. That status, not the technology you use, determines your access to the clearing houses.
• Never collect through legacy EFT debits. The payer is entitled to a refund there, with no review of the mandate. Move to DebiCheck, or failing that to the Registered Mandate.
• Budget for a 38% authentication failure rate on DebiCheck mandates, and track the rate by channel.
• Demand a fee breakdown: SARB-set interchange, scheme fees, acquirer margin. Published ranges run from 0.36% to 2.45% for interchange and from 1.5% to 3.5% for the total fee.
• Build cash into the customer journey, for both collections and refunds. Nearly one adult in two empties their account as soon as money comes in.
• Treat PayShap as an emerging merchant rail, not a proven one: the cost the payer sees depends on their bank, and push credits cannot be charged back.
• Track the NPS Bill and the PSMB transition: PASA is not set to remain the rule-making body.