A SARB Inquiry and Important Developments in SA’s Financial Offerings

The Reserve Bank (SARB) is conducting an overdue review of the interchange determination process. This relates to the costs imposed between banks on e-payments systems. The consumer associations approached SARB in 2006 calling for greater transparency in these costs. SARB launched an inquiry in 2008, followed by a feasibility study in 2011, and agreed a cost based methodology by 2014, with agreements with the banks on the interchange costs for point of sale and ATMs. It then set up the Payment Information Return (PAYIR) to monitor the system. The current project (Phase 4) is to determine what further needs to be done. EFSA has been invited to give views to SARB on 12 March based on a survey. The other stakeholders (the banks, retailers, credit card operators, etc) are each being invited to meetings with SARB during February. Although each charge may be small, the costs add up and lack transparency for the seller.

Meanwhile the Payments Association (PASA) is forging ahead with a number of initiatives which they have been preparing  over the last few years. These are:

Introducing payments using QR codes. Payment using QR codes is not new (Zapper and Snapscan have used QR codes for years), however the banks now want in to the technique for both point of sale (POS) and online. EFSA has offered to prepare a questionnaire with PASA on this issue – is anyone interested to join this initiative? Please let me know ([email protected]).

PASA has also started to roll out its mobile payment service – the Rapid Payments Process. This will allow anyone to send money via mobile to another mobile (even if the receiver does not have a bank account). Nearly all the banks support the system which will go live this year.

Project Khokha 1 and 2  is being run by SARB and the Intergovernmental Fintech Working Group (IFWG) and intends to introduce two cybercurrency systems – A “retail” central bank digital currency

(CBDC) which would be used as a digital extension of cash by individuals  and companies, and which would reflect in real-time in digital currency accounts; and a “wholesale” CBDC which would be used only by permitted institutions as a settlement asset in the interbank market. The 4 major banks are supporting the project, which is based on blockchain technology.

Finally, PASA plans to launch the New Electronic Payments Programme, a training programme for all in the industry interested in electronic payments. We will report on the details as soon as these are available.