The South African Reserve Bank has published a strategic paper positioning its Payments Ecosystem Modernisation (PEM) Programme, signalling a shift from mainly setting high-level objectives to taking a more active role in driving domestic digital payments. The programme is designed to increase adoption of fast, affordable, secure digital payments, reduce cash dependency, and deliver Vision 2025 objectives, with a national payment utility (NPU) intended to be central to national product development and the operation of retail payment systems. The paper sets out three drivers for modernisation: moving South Africa’s national payment system to a “higher equilibrium” through greater competition and efficiency, modernising “middle-mile” infrastructure, and offering viable digital alternatives to cash for underserved segments. A key plank is an activity-based regulatory model supported by a new licensing framework and an exemption notice to enable greater non-bank participation in activities such as e-money issuance and payment acceptance, alongside a pre-funded settlement model intended to allow non-banks to provide fast payment services without bank sponsorship. The NPU is positioned as a public interest-driven payments switch to reduce fragmentation and improve interoperability, with integration into digital financial identity (DFID) capabilities, baseline fraud and transaction insight functions, and standardisation of mechanisms such as QR and proxy-based payments; the modernisation narrative also includes phasing out legacy rails such as real-time clearing and electronic funds transfer over time. Implementation is organised across five sub-programmes, including extending existing settlement systems while a new real-time gross settlement platform is developed, creating the NPU (including an investment in BankservAfrica), building core transaction systems (domestic and regional RTGS and a fast payment system), delivering policy and interoperability enablers, and progressing DFID in collaboration with the Presidency and the Department of Home Affairs. The SARB indicates the PEM is intended to deliver rapid change over a defined period and then be disbanded, with further industry engagement and publications planned as initiatives move from concept to implementation; a review is also underway to confirm governance and consultation processes, with a majority independent board for the NPU envisioned.
South African Reserve Bank 2025-07-07
South African Reserve Bank sets out Payments Ecosystem Modernisation Programme and plans central bank-led national payment utility
The South African Reserve Bank released a strategic paper on its Payments Ecosystem Modernisation Programme to enhance digital payments and reduce cash dependency. Key initiatives include a new licensing framework for non-bank participation, a national payment utility for improved interoperability, and a real-time gross settlement platform. The programme comprises five sub-programmes, with plans for industry engagement and a majority independent board for the national payment utility.