South Africa’s financial landscape is undergoing a historic transformation as the South African Reserve Bank (SARB) opens the National Payment System (NPS) to non-bank fintech companies for the first time. This landmark decision, part of the Payments Ecosystem Modernisation (PEM) framework, breaks down barriers that previously limited NPS access to traditional banks only.
Breaking Down Traditional Banking Barriers
The NPS serves as the critical infrastructure underpinning South Africa’s financial system, managing everything from clearing and settlement operations to value transfers between parties. Until now, participation required full banking licenses, effectively excluding innovative fintech players from direct system access.
Under SARB’s Vision 2025 modernisation agenda, mobile payment providers, digital wallet operators, and other fintech companies can now participate directly in the national payments infrastructure. This shift promises to accelerate financial inclusion, particularly for underserved and unbanked communities across the country.
Risk-Proportionate Regulatory Framework
Recognizing that fintechs present different risk profiles than traditional banks, SARB has developed a proportionality-based approach to regulation. This means regulatory requirements are calibrated to match each fintech’s specific risk level and business model, avoiding the blanket application of traditional banking regulations.
The comprehensive Draft Directive, published in early 2025, establishes detailed requirements across multiple areas:
Governance and Personnel
- Key management must meet specified competency and integrity standards
- Clear accountability structures and decision-making processes
Financial Safeguards
- Mandatory segregation of client funds from company assets
- Appropriate capital requirements based on risk exposure
Consumer Protection
- Transparent informed consent protocols
- Clear disclosure of terms and conditions
Security and Compliance
- Robust anti-money laundering (AML) frameworks
- Advanced cybersecurity measures and incident response protocols
- Comprehensive reporting and monitoring systems
Legislative Foundation
The directive forms part of interim legislation designed to bridge the gap toward comprehensive National Payment System Act reforms. Alongside the Draft Exemption Notice under the Banks Act, it clarifies which payment activities fintechs can undertake without requiring full banking licenses.
Permitted activities include:
- Electronic wallet issuance and management
- Faster payment services
- Third-party payment processing
- Clearing and settlement operations
Balancing Innovation and Stability
SARB’s approach reflects a careful balance between fostering financial innovation and maintaining system integrity. By applying proportionate regulation rather than blanket restrictions, the central bank aims to unlock fintech potential while preserving the security and reliability that consumers and businesses depend on.
This regulatory evolution positions South Africa at the forefront of payment system modernisation in Africa, potentially serving as a model for other emerging markets seeking to integrate fintech innovation with robust financial oversight.
