SARB to release national payments system for fintech companies

As part of its strategy to scale financial inclusion to the unbanked and underbanked population in South Africa, the SARB has been working on enabling non-banks into the clearance and settlement system, in turn supporting standalone fintech companies and those run by retailers and mobile operators to facilitate payments between parties without involvement from traditional banks. Through this, the Reserve Bank aims to assist underserved communities, representing a substantial part of the fintech market, in transacting more conveniently and competently.

The plans to open the national payments system to fintech companies come months after SARB announced a roadmap intended at improving the country’s adoption of digital payment technology. The roadmap defined strategies for utilising cryptocurrency and Central Bank Digital Currency (CBDC) technology to increase financial inclusion and solidify the foundation of the payment system. The initiative allowed SARB to conduct studies that explored the feasibility of permitting fiat-supported stablecoins to undergo testing within a regulatory sandbox environment for two years. The move focused on stimulating interest in cryptocurrencies among the population.

SARB scaling financial inclusion through fintech

 Even if traditional banks remain the foundation of the financial system when it comes to savings and accounts, non-banks are also entering this space, providing wallet solutions that are convenient to the public. The SARB commented on the announcement, mentioning that it plans to move with and adapt to the current environment and open up the system for the entry of non-banks. At the same time, the financial institution highlighted the potential complexities brought by including fintech companies in the national clearance and settlement system, such as regulatory challenges. To mitigate these issues, the Reserve Bank opted to develop fit-for-purpose regulatory frameworks to control fintech companies that reduce risk to the broader system while allowing these firms to participate and remain active. The financial institution merged inputs from various stakeholders and experiments conducted in regulatory sandboxes to draft laws to manage non-banks in payments and settlements.

Furthermore, the SARB underlined that in opening up the system, the financial institution implemented the principle of proportionality, which means that the regulatory framework should meet the risks in trying to govern without expecting non-banks to fall in line with the difficult requirements that traditional banks need to adhere to.