Payment Developments – PayShap Launched in SA, Open Banking in Nigeria

The South African Reserve Bank (SARB) has announced the launch of SA’s real-time rapid payment platform called PayShap. PayShap aims to offer a cost-effective, convenient and instant payment service across banks, a proxy service to simplify the identification information for banking transactions, a request-to-pay service, as well as support for several known retail payment use cases. The service also addresses gaps in the interoperability of banking payment systems and is aligned with new international ISO standards for financial messaging, adopted by PASA last year. The introduction of PayShap comes at an exciting time for the SA’s financial sector, which is growing into one of the largest sub-segments of the fintech industry in Africa. As readers of this Newsletter will know, PayShap (previously known as the Rapid Payments Programme) has been long awaited. It is the outcome of collaboration between BankservAfrica, PASA and the SA banking community, with the aim of modernizing the national payments industry. It is rooted in the SARB’s Vision 2025 strategy aimed at reform of the SA’s national payment system framework.

The SARB has noted that PayShap will ultimately offer a cost-effective, instant payment service across banks, a proxy service to embed user banking details, a request-to-pay service, as well as support for several known retail payment use cases. The service also addresses gaps in the interoperability of banking payment systems by implementing the Transactions Cleared on an Immediate Basis (TCIB) payments platform. Users will benefit from the reduction in information that will be required for payments. In its initial phase, PayShap users will be able to access its real-time payment feature in order to pay recipients instantly, using either their banking details or by proxy via a unique identifier called a ShapID. A person’s ShapID could be a mobile phone number, or a bank-generated identification number, used as a proxy for their full banking details. These IDs are far easier to share and use than the cumbersome details needed for electronic funds transfers, which still require manual inputs of information such as branch codes, and the payee’s name and account details. At the launch, the partners said that PayShap will process real-time clearance of low-value transactions to a maximum value of ZAR 3,000. As we wrote in last month’s Newsletter, the real question is whether the commission on transfers will be reduced from the present EFT costs.

Meanwhile in Nigeria, the Central Bank of Nigeria (CBN) has released the “Operational Guidelines for Open Banking in Nigeria”. The Guidelines set out rules for sharing the data/information of customers between participants in the open banking system. Although not described in the Guidelines, an open banking system may be defined as the exchange of the data of an entity’s customers with other entities for the purpose of providing innovative financial services. Thus, the Guidelines recognize the right of customers to privacy and data protection and set out the rules for engaging in open banking in Nigeria. This is a major step forward for the CBN which has been somewhat conservative in the past.