South Africa is planning a major overhaul of its national payments system that will allow telecommunications companies, fintech firms and retailers to connect directly to the system, reducing their reliance on traditional banks as intermediaries.
The reform, led by the South African Reserve Bank (SARB) under its Payments Ecosystem Modernisation programme, is expected to begin taking effect from 2027, with the aim of increasing competition, expanding access to digital payments and reducing transaction costs.
SARB officials say new rules governing the activities that non-bank businesses can undertake, as well as possible exemptions, are expected to be published by November. Eligible firms could begin operating under the new framework around March 2027, following licensing and testing, ahead of a broader rollout later in the year.
The National Payment System Bill, released for public comment in September, proposes allowing non-bank providers to undertake several payment-related activities, including issuing electronic money, acquiring merchants and initiating payments.
The changes could create new opportunities for telecommunications operators, fintech companies and retailers to compete more directly with banks in the payments market.
South Africa is also seeking to increase the use of PayShap, its instant-payment service. The platform currently processes about 60 million transactions monthly, well below its target of 500 million transactions a month by 2029.
Arif Ismail, head of the SARB’s National Payment System Department, has been involved in the central bank’s efforts to modernise the country’s payments infrastructure.
As part of the reforms, authorities plan to introduce a standardised QR payment code, known as QR+, in November. The system is intended to make it easier for small businesses and informal traders to accept digital payments without incurring transaction fees.
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The initiative could extend digital payment options to small-scale traders who have traditionally depended on cash, including informal vendors and car guards. SARB officials have also said low-value transfers should be free, although the precise arrangements will depend on the applicable rules.
The central bank is separately planning reforms to South Africa’s automated teller machine network, including the expansion of services offered by independent ATM operators.
Of the country’s approximately 30,600 ATMs, about 9,200 are operated by independent deployers that generally do not accept deposits. A pilot programme is planned for January, with the first phase of a nationwide rollout expected by the end of 2027.
The SARB wants ATMs to offer a broader range of services, including cash deposits, withdrawals and balance enquiries. The reforms could also support free or low-cost transactions for smaller amounts.
Another major component of the programme is the creation of a national cash utility, which is expected to be established by March 2027 and wholly owned by the central bank.
SARB cash centres are expected to move into the new structure during 2027, with the longer-term plan involving the acquisition of cash-processing facilities currently operated by industry players, including SBV and Fidelity.
Despite its push to modernise payments, the central bank says it is not seeking to eliminate cash from the economy.
Cash still accounts for 56 per cent of consumer transactions by volume in South Africa, while the annual cost of managing and distributing it is estimated at R88.5bn, equivalent to about 1.2 per cent of gross domestic product.
The SARB says the cost of maintaining the cash system must fall by 30 per cent simply to keep it sustainable.
However, the central bank has stressed that cash remains essential to financial inclusion, particularly for people and businesses that have limited access to digital payment services.
“Cash is a public good and core to inclusivity,” the central bank has said, underscoring its intention to make the payments system more efficient without shutting out cash-dependent consumers.
About the Author
Cecilia Attah is a tech analyst with a degree from Benue State University. She covers tech news and startups at TechRegard with a focus on how technology is transforming Africa and shaping the global landscape.
