South African Reserve Bank's Prudential Authority publishes draft exemption notice treating specified payment activities as outside the Banks Act definition of banking business

The South African Reserve Bank’s Prudential Authority published a draft exemption notice that would deem certain payment activities in the national payment system not to constitute “the business of a bank” under the Banks Act, 1990, where those activities involve pooling funds from the public into a store of value or payment account. The designation, made with the Minister of Finance’s approval, is subject to conditions that link the exemption to the Reserve Bank’s supervision and a new regulatory framework for these activities. The draft defines the in-scope payment activities to include acquiring, card credit payment instructions, execution of payment transactions (including debit orders and credit transfers), electronic money (including mobile money), faster payments, issuing payment instruments, money remittance, and provision of payment accounts or stores of value (including specified account types). Conditions include Reserve Bank regulation, supervision and oversight under the National Payment System Act, requirements to integrate activities into a payment clearing house for open-loop arrangements, and compliance with clearing and settlement rules and participation requirements. Non-banks would generally need to partner with a bank unless authorised or approved under the exemption and the associated regulatory framework, and the activities would be limited to payment purposes only, with prohibitions on loans, investments and the accrual or application of interest, except as directed by the Reserve Bank. The exemption would take effect on a date set by the Reserve Bank as the implementation date of the relevant regulatory framework. The Prudential Authority would be able to amend or withdraw the exemption notice by publishing a further notice on its website.