The Reserve Bank will now also have control over PayShap, which offers accessible, convenient, and secure payments for everyday transactions.
The Competition Commission has recommended that the Competition Tribunal approve the proposed transaction that will give the South African Reserve Bank sole control over payment company BankservAfrica without conditions.
This means that the South African Reserve Bank (Sarb) will have full control over BankservAfrica, the developer and processor of South Africa’s new instant payments system, PayShap.
The commission says in a statement that the Sarb, as the primary acquiring firm, is an organ of state established in terms of section 9 of the Currency and Banking Act and is not controlled by any firm. The Sarb controls several firms relevant to its mandate as South Africa’s central bank.
The Sarb is constitutionally and statutorily mandated to protect the value of the South African rand in the interest of balanced and sustainable economic growth. In addition, the Sarb has a mandate to enhance and protect the financial stability in South Africa.
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Why is Reserve Bank–BankservAfrica transaction important?
This transaction is important, because the Sarb is responsible for managing the National Payment System (NPS), that includes all the systems, mechanisms, institutions, agreements, procedures, rules and laws that come into play from the moment an end-user, using a payment instrument, issues an instruction to pay another person or a business, to the final interbank settlement of the transaction in the books of the central bank.
BankservAfrica is also not controlled by any firm. In South Africa, BankservAfrica controls Automated Clearing Bureau Investments Johannesburg. It is a payment clearing house system operator and its core activity is delivering payment clearing and settlement services for South African financial institutions, such as banks.
The payment systems of BankservAfrica also allow for interbank switching, clearing and settlement.
The commission said in its statement that the proposed transaction is unlikely to substantially lessen or prevent competition in any market and does not raise significant public interest concerns.
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BankservAfrica transitioning to national Payments Utility
Stephen Linnell, CEO of BankservAfrica, says he is pleased to announce a significant industry collaboration with the Sarb, intended to transition the company into a national Payments Utility through a collaboration with commercial bank shareholders.
“While still subject to conclusion of the detailed transaction agreements and regulatory approvals, this strategic partnership seeks to bolster efforts to modernise South Africa’s national payment system, making the payment system more secure, inclusive and efficient.
“Our role has always been to provide essential payment services for financial institutions. This consequential partnership between the company, its commercial bank shareholders and the Sarb, signifies both a continuation and expansion of that role as we focus more deliberately on financial inclusion through affordable access to modern payment capabilities.”
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BankservAfrica’s PayShap growing rapidly
PayShap is a foundational offering of the envisioned Payments Utility, a service BankservAfrica launched in March 2023 that allows South Africans to make instant payments. Growing rapidly with more than 1 million transactions per day, PayShap enables more accessible, convenient and secure payments for everyday transactions, Lynell says.
The commission says more details of the intended transaction will be made public once the contractual and regulatory processes have been finalised.