The South African Reserve Bank’s (SARB’s) decision to restructure the Payments Association of South Africa (PASA) into the new co-designed Payments Industry Body will stimulate innovation and promote collaboration and financial inclusion in SA’s financial sector.
This was the word from Chris Wood, regional MD of Southern Africa and PALOPS region, at payments solutions firm Network International.
Speaking to ITWeb on the side-lines of the ninth Africa Bank 4.0 Summit hosted by Network International, Wood discussed the current state of SA’s banking system and how the newly-formed Payments Industry Body is expected to boost digital inclusion by accelerating digital transformation in the sector.
PASA is the payment system management body recognised by the SARB, in terms of the National Payment System Act of 1998.
In June 2021, the SARB announced plans to reform PASA into the new Payments Industry Body, in efforts to add an inclusive community of payment system stakeholders from other emerging industries, such as e-commerce and fintech players, as committee representatives.
According to SARB, the new body was introduced in efforts to achieve and maintain interoperability, support the execution of Vision 2025 and other policy goals, in the interest of the National Payment System.
In 2018, the SARB published the National Payment System Framework and Strategy – known as Vision 2025, which sets out the goals and strategies for the national payments industry.
Vision 2025 establishes the roadmap to building a world-class National Payment System that must be capable of meeting the evolving needs of South Africans in the digital economy, says SARB.
According to Wood, to attain this vision, the Payments Industry Body will enable industry stakeholders to collaborate to ensure the safety, efficiency, integrity, transparency and accessibility of the National Payment System, while accelerating electronic payments.
“Vision 2025 is about how we increase financial inclusion, and a big part of that is reconfiguring PASA into what’s now called the Payments Industry Body,” explained Wood.
“This will bring in players who were previously not part of PASA into the financial ecosystem. So, what we are seeing in the payments industry now is the Payments Association of South Africa, which has always been the body that brings the banks together, now encompassing members from a broader community, like the fintech, mobile operators and online retail space, who will participate in policy decision-making for the sector.”
The process of designing the new Payment Industry Body commenced in September 2021 and is still ongoing, after robust debates and iterations from the sector. PASA is overseeing the initiative, which is expected to be implemented in 2023.
Network International is among the organisations that have been given a seat in the membership structure, to represent the fintech sector.
In SA, consumers and businesses have a choice of more than 18 different payment systems, ranging from low-value card transactions to high-value bond exchange payments.
The Payment Industry Body, according to SARB, will ensure a transparent regulatory and governance framework, as well as regional integration of these systems.
Describing the move as “crucial”, Wood highlighted that previously, the banking representatives which formed PASA were the decision-makers and determined how policies were executed and rolled out– making them the sole drivers of banking industry resolutions.
“But if you put some fintechs and retailers at the table – who are the recipients of the decision-making – this will now fundamentally shift the conversations, because the industry committees will now have different voices representing each of the stakeholders,” he continued.
“And that’s really important because the Payments Industry Body becomes a community of people engaged in a conversation that could lead to a bigger consolidation of collaboration, execution and innovation.”
Speaking during a recent PASA webinar, Ghita Erling, CEO of PASA, pointed out that, in order to remain relevant and be sustainable, the National Payment System needs to be inclusive of all payments participants and service providers – not only to prevent fragmentation of payment systems, but also to leverage the power of payments digitisation.
“PASA has served its purpose exceptionally well in the last 25-plus years, and there’s been a lot of debates over the past year on whether or not there is a purpose in developing the Payments Industry Body to manage the payment system.
“After many debates and discussions, we’ve come to the conclusion that yes, there is a purpose. It is imperative that the new envisaged Payment Industry Body is endowed with the existing know-how, well-functioning systems, rules, procedures and regulatory frameworks that manage the operations of the National Payment System – and that all these assets are further developed over time through greater industry participation,” explained Erling.
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