New Online Payment Protocol Expected
At the Payments Association (PASA) Card Payment Stakeholders Forum meeting on 6 June, PASA pointed out that the new 2.0 security protocol which is to be introduced, will be a great improvement for ecommerce over the present system, particularly for purchases made on mobiles, as it will reduce the need for OTPS verification while providing the highest level of security. It hopes to introduce the new system by the end of the year. It is expected that the old OTPS verification system would be reduced to about 20% of online purchases next year and slowly phased out thereafter.
There was also a discussion on the future of BankServ Africa, given the rapid growth of both Mastercard and Visa in the SA marketplace. This raises a problem in terms of control (both card systems are controlled by the US Securities authority), and whether both companies would be prepared to set up formally in SA.
Another issue which was raised in another PASA Forum I attend this month was that the growing use (and availability – Facebook’s Libra was mentioned) of crypto-assets for international remittances which are disintermediating the banks. The banks are concerned that SA regulation has not caught up. There are a number of financial regulatory issues which were delayed by the elections in May, including how the Banking Federation has to be operated. This includes the work of the Banking Federation’s subsidiaries like PASA. PASA has drafted an Operating Model Optimisation (OMO) plan to streamline its operations and bring non-banking interests into its operations.
And while we are on the subject of payments, Libra, Facebook’s new crypto-currency offering which was launched this month aims to be a low or no-cost global payments and financial services ecosystem. Facebook claims that the system is intended to give billions of people access to the “internet of money.” This ecosystem consists of that new network, a new global currency and governance system that puts control of Libra in the hands of an association of financial services and payments industry stakeholders. The ecosystem’s first application is a stand-alone digital wallet, Calibra. Banks in Europe have already responded by offering instant transfers for their customers. Instant transfers, which stop the long process of transferring money, particularly cross-frontier, have been available for domestic transfers from some European banks since 2017 but are now being promised for any transfer. Will this be enough to tempt European customers from using Libra?
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