From mid-2027, telecommunications companies, fintechs and retailers will be allowed to participate directly in South Africa’s national payments system, in a move that could end banks’ long-standing dominance of the country’s payment infrastructure.
Pradeep Maharaj, executive director of the South African Reserve Bank’s Payments Ecosystem Modernization (PEM) programme, disclosed the plan during a media briefing on Friday. The reform will allow licensed non-bank companies to connect directly to the national payments infrastructure, which clears and settles payments across the country, rather than relying on banks as intermediaries.
The Reserve Bank hopes the change will increase competition, lower transaction costs and expand access to digital financial services. The proposed changes form part of a wider effort to modernize South Africa’s payments industry and make digital transactions more accessible to consumers and businesses.
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Non-banks prepare to enter a bank-dominated system
The proposed framework, outlined in the National Payment System Bill released for public comment in September, will initially allow non-bank operators to carry out seven payment activities independently. These include issuing electronic money, acquiring merchants and initiating payments.
The South Africa’s Reserve Bank plans to publish rules governing the activities and exemptions by November. Non-bank participants are expected to begin operating around March 2027, following licensing, testing and systems integration, ahead of the wider rollout expected in mid-2027.
Although the changes could increase competition for banks, Maharaj said the reform was not intended to undermine existing financial institutions. Instead, the Reserve Bank wants to give more businesses the opportunity to develop services for customers who have not been adequately served by traditional banking.
Maharaj said the central bank wants to expand access to payment infrastructure rather than target banks.
“Banks are doing a great job, and will continue to do so,” Maharaj said.
He added that the objective was to give entrepreneurs greater opportunities to reach underserved parts of the economy.
“Our idea is simply to open access and to let entrepreneurs be able to serve sections of the economy that have been underserved by traditional banking.”
The change could create more opportunities for fintechs and telecommunications companies, including mobile money providers such as MTN, to compete in digital payments without depending entirely on banks for access to the underlying infrastructure.
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PayShap has 440 million monthly transactions to gain
The opening of the payments system is part of the Reserve Bank’s broader plan to increase the use of affordable digital payments and reduce reliance on cash.
PayShap, South Africa’s fast-payment service, currently processes approximately 60 million transactions a month. The Reserve Bank is targeting 500 million monthly transactions by 2029, leaving a gap of 440 million transactions between current monthly volumes and its target.
Arif Ismail, head of the Reserve Bank’s national payment system department, provided the figures. The target highlights the scale of the adoption the central bank hopes to achieve as it modernizes payment infrastructure and encourages more people and businesses to use digital services.
Maharaj also criticized inconsistencies in the way payment services operate, saying banks had developed a strong system but retained considerable control over its rules and implementation.
He said differences in how banks apply limits and other requirements had prevented customers from having a consistent payment experience.
“It is not a uniform experience, that is the problem,” Maharaj said.
The Reserve Bank wants low-value transactions to be free and plans to introduce a standardized QR+ payment code in November. The code is intended to make digital payments easier to accept, including for informal workers such as car guards.
The aim is to reduce the cost of accepting payments for small businesses while giving consumers more affordable alternatives to cash.
The cash problem South Africa cannot ignore
While the Reserve Bank is working to expand digital payments, it is also trying to reduce the cost of maintaining the infrastructure that supports cash.
The central bank has proposed creating a national cash utility, a central bank-owned company that would handle parts of the country’s cash distribution and management system. It also plans to introduce white-label ATMs, which would operate as shared infrastructure rather than being tied to individual banks.
Under the proposed model, ATMs would provide deposits, withdrawals and balance enquiries, with transactions below a specified amount offered free of charge.
Maharaj said the Reserve Bank wants banks to move towards a shared ATM model.
“We are asking banks to white-label all ATMs,” Maharaj said.
The change could affect a significant part of South Africa’s ATM network. According to the Reserve Bank’s cost-of-cash study, around 9,200 of the country’s approximately 30,600 ATMs are operated by independent deployers that do not accept cash deposits.
A white-label ATM pilot is expected to begin in January, with the first machines planned for nationwide rollout by the end of 2027. The banks have proposed alternative models, and the Reserve Bank expects to respond in November.
The national cash utility is scheduled to be established by March 2027. The Reserve Bank expects to move its own cash centres into the utility during 2027 and begin incorporating industry-owned centres, including those operated by SBV and Fidelity, which the utility is expected to acquire.
Unlike PayInc, formerly known as BankservAfrica, in which the Reserve Bank holds a 50% stake, the proposed cash utility will be wholly owned by the central bank.
R88.5 billion shows the cost of keeping cash moving
The scale of South Africa’s cash economy helps explain why the Reserve Bank is pursuing changes to both digital payments and cash infrastructure.
The central bank’s 2026 Cost of Cash Research Study estimates that cash accounts for 56% of consumer transactions by volume and costs the economy R88.5 billion annually, equivalent to approximately 1.2% of gross domestic product. The study examines the direct and indirect costs of distributing, accessing, accepting and using cash.
Despite the push towards digital payments, cash remains important to consumers and merchants across formal and informal markets. The Reserve Bank has therefore said its goal is not to eliminate cash but to make the system more affordable and efficient.
Maharaj described cash as essential to financial inclusion.
“Cash is a public good and core to inclusivity,” Maharaj said.
He also said the cost of cash would need to fall by at least 30% for the system to maintain its current position.
For South Africa, the challenge is to expand affordable digital payments without excluding people who still depend on cash. Giving fintechs, telecommunications companies and retailers direct access to payment infrastructure is one part of that effort, while shared ATMs and a centralized cash utility are intended to address the cost of maintaining physical cash services.
The next steps will include publishing the non-bank payment rules by November, launching the white-label ATM pilot in January and establishing the national cash utility by March 2027. Licensed non-bank payment providers are expected to begin operating ahead of the broader mid-2027 rollout.
