In meeting its policy commitments and addressing the regulatory amendments required to implement the Payments Ecosystem Modernisation (PEM) Programme, the South African Reserve Bank (SARB) published two draft documents for public comment.
The first draft document is a draft exemption, namely, the Draft Specific Payment Activities Exemption Notice (Draft Exemption Notice), which is set to be published under the Banks Act. The other document is known as the Directive in respect of specific payment activities within the national payment system (Draft Directive), set to be published under the current National Payments System Act (NPS Act).
Both documents, which were initially published in March 2025, have been revised and it is clear that the SARB has taken on board the numerous public comments received during the initial public comment period. The revised drafts are materially different from the version published in March. In particular, the revised documents seek to provide clarity on the activities that are within scope and provide proportionality in relation to which activities are regulated and who should be regulated.
The Draft Directive sets out certain activities which require an application to conduct a payment activity, namely:
- issuing e-money or payment instruments;
- acquiring payment instructions;
- payment execution (which entails clearing, settlement and payment initiation);
- payments to third persons/ their part payment providers (TPPPs);
- schemes;
- money remittance;and
- closed loop payment system or payment activity.
In relation to the activities requiring an application for authorisation, the Draft Directive provides the following definitions and descriptions:
Payment activity | Definition and description |
Acquiring of payment instructions | A payment service provided by a payment institution contracting with a payee to accept and process payment instructions, which results in a transfer of funds to the payee. |
Clearing | Has the same meaning as defined in the NPS Act |
Closed-loop payment system or payment activity | A payment system or payment activity that is not interoperable and is provided or conducted by a single service provider for intended use within a limited network or ecosystem, and both the payer and the payee who are clients of the service provider participate in the same payment system or payment activity provided by the service provider, excluding:
- on-us transactions that are in the open-loop payment system where both the payer and the payee are clients of the same entity; and
- gift cards, mall and airtime vouchers, loyalty programmes, prepaid cards or instruments issued solely for the purchase of goods and services from the issuing entity and which are not redeemable for cash.
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E-money | A store-of-value product that (i) is a digital representation of a fiat currency (legal tender); (ii) is a claim against the issuer; and (iii) can be redeemed at face value on demand. E-money may be accepted as a means of payment by persons other than the issuer or be accepted within the issuer’s network or ecosystem. For the purposes of this Directive, emoney includes ‘mobile money’. |
Mobile money | E-money where an electronic wallet service allows users to store, send and receive money using their mobile phone. |
Money remitter | A person performing a service for the transmission of funds within South Africa, with or without any payment accounts being created in the name of the payer or the payee, where:
- funds are received from a payer for the sole purpose of transferring a corresponding amount to a payee or to another payment institution acting on behalf of the payee; or
- funds are received on behalf of, and made available to, the payee.
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Payer service provider | A person that accepts money or proceeds of payment instructions, as a regular feature of that person’s business, from a payer to make payment on behalf of that payer to multiple beneficiaries. |
Payment execution | The ability of a payment institution to submit clearing and settlement instructions or to process payment instructions for the purposes of clearing or settlement. |
Payment initiation | An electronic service to initiate a payment instruction at the request of the payer with respect to a payment account held at another payment account service provider. |
Payment instruction | An instruction as defined in the NPS Act |
Payment instrument | A tool or mechanism, physical or electronic, which enables or initiates the transfer of funds from a payer to a payee to make or receive a payment. |
Scheme | A set of formal, standardised and common binding rules governing the relationship between payment institutions or an agreed-upon arrangement between payment institutions defining the functional, business, legal and technical rules for executing payments using a particular instrument. |
Settlement | has the same meaning as defined in the NPS Act |
Third-party payment | the acceptance of money or payment instructions by third-party providers as a regular feature of business, from any other person, for the purposes of making payment on behalf of that other person to a third party to whom that payment is due. |
Third-party payment provider (TPPP) | A person that provides thirdparty payment. A TPPP may be a payer service provider and/or a beneficiary service provider as defined in the definition of 'payer serviced provider' and the definition of 'beneficiary service provider' above respectively. |
Familiarise yourself with proposed payments regulation
Published under the existing regulatory frameworks, its vital for role players to familiarise themselves with the draft documents while they still have an opportunity to take part in the public consultation process which will shape their final iterations of the draft documents.
Role players should familiarise themselves and engage with the definitions set out in the draft documents and potential future licensing and ongoing compliance requirements.
Things to note
As with the previous draft of the Draft Directive, the current version retains requirements that deal with governance, prudential criteria, data protection, regulatory reporting and licensing/authorisation criteria. There are also fit and proper requirements for key persons. The Draft Directive retains the introduction of capital requirements for certain payment providers.
In relation to the Draft Exemption, entities that provide stores of value have always been careful to ensure that their store of value would not provide for activities that could potentially constitute accepting a deposit as defined under the Banks Act and thereby require licensing under the Banks Act.
The Draft Exemption Notice attempts to clarify the position and exempts the payment activities listed in the Draft Exemption Notice from the definition of 'the business of a bank' as set out in the Banks Act. It’s important for entities who provide payment activities which involve digital wallets or the pooling of funds into a store of value to assess whether they may be covered by this proposed exemption.
Next steps
The public comment period for the draft documents closes on 5 December 2025. Industry players are encouraged to review the draft documentation and assess their applicability and potential impact on their businesses to establish if they wish to provide comments before the deadline.
For further assistance, contact Lerato Lamola, Christoff Pienaar, Mieke Vlok and Analisa Ndebele, or your usual Webber Wentzel contact.
