The South African Central Bank is preparing to bring the country's rapidly growing fintech sector to the same regulatory level as traditional banks. Governor Lesetja Kganyago used the opening of the MTN Group Fintech summit in Johannesburg on Tuesday to announce the forthcoming public consultation on the long-awaited National Payment System Act.
Speaking at the keynote address of the second MTN Group Fintech Summit, Kganyago stated that the central bank's payment system reform will allow South Africa to transition from an institution-type based model to one focused on the activity itself. Under this new paradigm, 'similar payment operations should fall under similar regulatory expectations, regardless of whether they are conducted by a bank or a fintech company.'
At the industry roundtable, Cedric N'Gessan, a representative of MTN Group Fintech, noted that several other African markets allow non-bank entities to obtain a special mobile money license instead of a full banking license. Such a license does not exist in South Africa, forcing fintech companies to partner with licensed banks for money transfers. N'Gessan added that the Central Bank is working on creating a local equivalent intended to close this gap within the regulatory framework and the National Payment System Act.
Kganyago emphasized that this principle promotes the opening of the system to new participants. New players must assume 'the core obligations that are the entry cost into the payment system,' including supervision, ensuring client fund security, anti-money laundering control, and continuous monitoring.
Clearer Regulatory Pathways
The Central Bank is beginning work on a framework authorization system to ensure clearer regulatory pathways for participants and payment operations. This will be followed by the National Payment System Act, which, according to Kganyago, will provide 'a more robust legislative foundation for the ecosystem.' He called on the audience to participate in the discussion of the bill, as it will change the operating environment for market participants.
A key element of the new structure is PayInc, an organization previously known as BankservAfrica. The Central Bank has taken a stake in it, and it is transforming into a national payment utility accessible to all compliant participants. Kganyago described it as 'a national payment utility available to all players who meet the requirements of participating in the South African payment ecosystem.'
He reported that modernizing payments is now one of three main strategic goals of the Central Bank, alongside price stability and financial stability. Meanwhile, fintech companies are already actively transforming the market. According to the Central Bank's second fintech survey, approximately 400 such companies operate in South Africa, helping to expand access, improve customer experience, and encourage established institutions to raise governance and sustainability standards.
Kganyago applied the 'no questions asked' test (borrowing from the Bank for International Settlements) to the entire process: money is what the counterparty accepts 'without complaints or hesitation.' He argued that neither cash nor cards currently fully pass this test in South Africa, as many consumers prefer withdrawing benefits in cash due to concerns about fees and security, while sellers are reluctant to accept cards due to 2-3% fees.
He expressed hope that South African money will be accepted with confidence, 'without questions,' wherever it is used. He also warned that modernization increases the stakes regarding risk and resilience. Where a payment used to pass through several banks, it can now start on a phone, be processed by cloud infrastructure, and pass through several technology providers in seconds. 'A failure of one technology provider can affect several institutions. A cyber incident can undermine trust far beyond the institution where it began.'