South African banks have lost the body that collectively managed the national payment system. On September 2, the recognition by the Payments Association of South Africa (Pasa) as the governing body of the country's payment system expired, ending a 27-year period of self-regulation.
Pasa's functions, personnel, and intellectual property have been divided between the central bank and PayInc, a payments infrastructure company formerly known as BankservAfrica, in which the Central Bank holds a 50% stake.
The central bank issued a directive to withdraw recognition on June 2, providing three months' notice. The first part of the functions was transferred on August 11, and the remainder, including everything moving to PayInc, was transferred by September 2. The central bank explained this decision was necessary due to structural and operational issues with the governing body model. Although the system did not fail, the management of the national payment system has been divided and redistributed.
During a briefing for Standard Bank clients on Wednesday, Lesego Chauke, who held the position of Chief Payments Specialist at Pasa until September 1 and now holds the same position at PayInc, explained to users of the payment system what had changed.
Payment clearing houses, structures where participants agree on rules for each type of payment, have been split into three pillars of the system. Card payments and high-value payments, along with their subordinate committee structures, have moved to the central bank, as have licensing, authorization, and registration of payment institutions. Low-value payments—electronic transfers, debit mandates, and instant payments, which South Africans most frequently use daily—have moved to PayInc. Pasa employees, including Chauke, followed their portfolios.
What Remains Unchanged
Banks continue to participate in these structures. What they have lost is a non-profit organization that they owned and funded, which had the mandate to organize and regulate their participation in the system. Now, the authority to develop rules rests with the central bank and PayInc, with the other half of PayInc's shares held by jointly participating commercial banks, meaning the agreements underlying the types of payments most commonly used by ordinary South Africans have moved to an organization partially owned by banks.
It remains an open question whether the Central Bank will use its new power to expand access for non-bank organizations. Chauke emphasized that the rules themselves have not been rewritten. The payment clearing house rules under which banks and sponsored non-bank organizations operate remain the same, as do the sponsorship and designation models, risk and compliance management obligations, and the stance on licensing system operators and third-party payment providers.
She stated: 'From a day-to-day operations perspective, nothing changes for users. Changes at this stage are still in the backend, around governance frameworks and further development.'
Parallel to this is the central bank's payment ecosystem modernization program, under which PayInc is transforming into a national payment utility: a common, open infrastructure element to which banks, fintech companies, and other non-bank organizations can connect directly, instead of using a bank-owned clearing house through a sponsor.
Alongside this, the central bank's national payment system department is developing an authorization framework, as well as a national payment system bill that was released for public comment on September 1. Chauke reported that the central bank received 'hundreds of pages' of industry feedback on the draft framework and expects the next iteration around the first quarter of 2027.
The main idea is the shift from regulating organizations to regulating activities. Ntabiseng Mohale, Head of Interbank and Domestic Payments at Standard Bank, noted that this is the most significant shift for business. Expanded participation allows non-bank organizations to perform actions that previously required a banking license or a bank sponsor, but this does not lower standards.
'Since you are performing the same activity as a bank, regardless of whether you are a bank or not, you are expected to comply with the same requirements,' she said. Requirements for governance, anti-money laundering, and fraud, as well as operational risks, apply to the activity itself.
Several specific changes are already visible in the industry roadmap: standardization of PayShap, technical standards for QR and payment initiation, the final discontinuation of the real-time clearing system, amendments to the National Payment System Act, and the requirement for registration for closed systems, which the central bank does not encourage but accepts as existing. Closed schemes will be permitted without full authorization only if the annual transaction volume is below 15 million rand or if there are fewer than one million customers. Third-party payment processors will be limited to two official recipient accounts.
Cross-Border Operations
Ntabiseng Sibanda, Standard Bank's regional head of payments for Africa, stated that faster and cheaper cross-border payments depend on something subtle. 'None of this happens without quality underlying data,' she said, implying accurate, complete data supported by appropriate documentation.
The immediate standard is ISO 20022, which replaces free-text payment fields with structured ones: street, city, locality, and country each in its own field, rather than in one line that the verification system must guess. Swift postponed its industry activation date for structured addresses from November 14 to the first quarter of 2027 after discovering uneven readiness across different regions. Standard Bank did not follow this change.
Sibanda stated: 'We are not changing the date. We are sticking to what we always said, which is October 10.' Companies that miss this date risk payment delays and returns, additional fees, and missed supplier deadlines, especially in highly transparent markets such as China, Canada, and the UK, where vague addresses are increasingly blocked.
Two other changes are important for everyone making payments to the South African region:
- As of August, payment purpose codes within the Common Monetary Area (CMA) have been harmonized, so the code used in South Africa now means the same thing at the receiving bank in Namibia, Lesotho, or Eswatini. Previously, a code meaning 'import deposit' in one market could be read as 'advance payment' in another, causing the payment to stop.
- The directive requires banks in the CMA to migrate low-value cross-border payments from the SADC real-time clearing system to TCIB, a regional real-time low-value payment scheme, by March 2027. Customers initiate payments the same way, and routing decisions are made behind the scenes.