Payment Exchange of South Africa (Pexsa) has developed a new online platform targeting property transactions.
The developers say Pexsa is a secure online payment settlement gateway for property transactions. It is the first of its kind in SA, and was developed locally for global application, they note.
The Pexsa property payment system ensures secure and speedy settlements ahead of the envisaged Electronic Deeds Registry.
Despite extensive legislation, last year claims to the value of R161 million were lodged with the Fidelity Fund due to error or misconduct during the conveyance process, says Pexsa.
"With over 285 000 South African property transactions during 2016, we need a payments and settlements framework that builds trust, creates certainty, reduces fraud, enables transparency and accountability, and essentially ensures social justice for the ordinary South African property buyer and seller," says Willie Stoman, CEO of Pexsa.
He explains that despite being one of the largest asset classes in SA, property payment transactions have lagged in modernisation, leaving payment and settlement processes less efficient, and more vulnerable to market disruption and security threats.
Currently, the Deeds Registry Act 1937(Act No 47 of 1937) and the Sectional Titles Act, 1986(Act No 95 of 1986), provide for a manual deeds registration process.
Traditional property payment systems have not kept up with technology and are in no position to handle the anticipated 20 million land parcels to be registered in the Deeds Office in future, Stoman points out.
According to Renier Nel from Nel Attorneys, the conveyance sector is in need of a modernised, secure and streamlined payment and settlement system. "Payment of proceeds at the end of a transaction is probably the most important and risky element, and the process would be futile if compromised," says Nel.
"As the law industry becomes more advanced, and in lieu of the advances in technology and the rise in fraud associated with such advances, I believe the industry will need systems that eliminate risk."
"Currently, registration of title in the buyer's name happens before the seller receives his proceeds. The seller, in many instances, only receives his proceeds days, or even weeks later. This is risky for the buyer, seller and financial institutions granting mortgages. Moreover, the seller doesn't have his money, although the buyer is already the registered owner of the property," adds Stoman.
"Consumers receive e-mail and mobile notifications and alerts for e-commerce purchases, but when buying and selling a property, they are at the mercy of the conveyancer as to when they will receive payment.
"Buying a property is probably the largest financial transaction a consumer will make in his or her lifetime, and savvy consumers are demanding more transparency, real-time updates and the need to have their money instantly available upon registration, and once the funds are available," Stoman says.
The Pexsa online platform removes the manual payment and settlement processes, enabling time savings, greater transparency, notification and immediate disbursement of the proceeds of a property sale, he notes. It is open to all banks, financial institutions, non-banking financial institutions and conveyancers, and is designed for integration with the envisaged Electronic Deeds Registration System.
"When developing this solution, as part of our research into improvements and efficiencies in the market, we studied models used in other environments which have successfully mitigated a number of risks in the exchange of assets since its inception. Strate was one such company," adds Stoman.
According to Dale Connock, head of risk at Strate, SA's Central Securities Depository, protection of the buyer and seller is paramount in the settlement of a transaction.
"In the context of a securities transaction, protection of both buyer and seller is one of our key objectives. To protect the buyer, the ecosystem must ensure the securities being delivered to the buyer exist, and that they are freely available to be transferred. In the same way, and in order to protect the seller, there needs to be appropriate assurance that the buyer has the funds available to make the purchase," says Connock.
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