Angela Itzikowitz, Executive; Era Gunning, Consultant; and Dylan Martheze, Candidate Legal Practitioner; Banking and Finance at ENS

For decades, banks have been at the centre of South African payments. A business that wanted to process transactions, facilitate payments or launch a new fintech product generally needed a bank to access the national payment system. That has shaped how payment services are delivered, who can take part and how competition develops. The South African Reserve Bank (“the SARB”) now wants to change that.

Speaking at the recent SARB Payments Conference, Governor Lesetja Kganyago outlined plans to open South Africa’s national payment system (“NPS”) to appropriately regulated non-bank institutions, allowing them to perform specified payment activities without a banking licence or bank sponsorship.

The proposals form part of the SARB’s Payments Ecosystem Modernisation Programme and could be significant for fintechs, payment service providers, financial institutions and other businesses in the payments sector. The aim is not to remove banks from the payment system, but to question whether other providers should have to go through a bank to take part.

The case for change

Currently, non-bank payment providers generally depend on banks to access certain payment infrastructure and perform payment activities. These arrangements have helped the industry grow, but they also create dependencies that affect market entry, operating costs and the ability of non-banks to compete on their own. The SARB’s approach separates the risks of banking from the risks of providing payment services.

Banks are heavily regulated partly because they use funds repayable on demand or at short notice to finance longer-term assets (known as maturity transformation). This creates liquidity and financial stability risks that justify close oversight. Payment service providers do not necessarily carry the same risks. Requiring all of them to operate through a bank may impose regulatory and commercial burdens out of proportion to the services they provide.

What the SARB is proposing

In May 2026, the Prudential Authority published a draft Exemption Notice proposing that specified payment activities be excluded from the definition of the business of a bank under the Banks Act, 1990. These activities include issuing electronic money, acquiring payment instructions, payments to third persons, money remittance, clearing and settlement. An accompanying draft Authorisation Framework sets out proposed requirements for these and other payment activities, including payment initiation, moving towards regulation based on the activity performed rather than the type of institution.

For fintechs and other non-banks, this could open a more direct route into payments. Instead of relying on a bank simply because an activity falls within banking regulation, qualifying institutions could apply for authorisation to perform it themselves.

This does not mean less regulation. Non-bank providers would still face requirements matched to the risks of their activities, covering governance, safeguarding customer funds, operational resilience, risk management, reporting and, where relevant, clearing and settlement.

A fintech authorised to perform a payment activity would not be allowed to take deposits, conduct banking business or access settlement infrastructure without proper oversight. The question becomes whether an institution is authorised to perform a particular payment activity, not whether it holds a banking licence.

What it means for banks and fintechs

For banks, the impact could be substantial. They may need to rethink their relationships with fintechs, payment processors and other non-banks, as sponsorship, outsourcing and infrastructure arrangements change when authorised providers become more independent. Banks would, however, remain central to the financial system, providing banking services, liquidity and infrastructure.

For non-banks, the opportunity brings more responsibility: they would need to show that they can perform their authorised activities safely.

This is especially relevant for South Africa’s growing fintech sector, where business models often combine payment processing, digital wallets, merchant services and remittances. A clearer framework could help businesses understand which activities they may undertake, which permissions they need and which obligations apply.

PayShap and other initiatives

The proposals tie in with the SARB’s push to grow the use of PayShap, South Africa’s real-time digital payment service. Since its launch in 2023, PayShap has processed more than one billion transactions worth over R1 trillion. Even so, Kganyago acknowledged that it is still far from being an everyday payment method for many South Africans.

Differences between banks in transaction limits, pricing, functionality and customer experience continue to hold it back. A national instant-payment system should work in much the same way wherever a customer banks, while still allowing banks to compete on their wider products.

The SARB has therefore called for greater consistency, clearer pricing, better consumer awareness and wider merchant acceptance. It wants PayShap to go beyond person-to-person transfers and become a practical way to pay for everyday goods and services. Modern infrastructure is not enough on its own. People and businesses must also find it convenient, affordable and trustworthy.

The SARB is also developing QR+, an interoperable QR-code payment standard, and a digital identity solution for payments. These aim to make it easier to accept digital payments and onboard customers, especially for small businesses and people underserved by existing financial services.

New risks to manage

More participants, however, raise new questions. As more non-banks perform payment activities, it becomes more important to settle who is responsible for customer funds, failed transactions, fraud prevention, anti-money laundering controls, data protection and operational disruptions. Clear authorisation requirements and effective supervision will be needed to ensure that more competition does not compromise the safety of the NPS.

Next steps

The reforms are not yet in place with Kganyago indicating that the SARB intends to publish the Authorisation Framework by the end of November 2026, with work on the obstacles to PayShap adoption expected to begin by the end of March 2027. The exact impact on individual providers will depend on the final rules and their authorisations.

Banks, fintechs and payment service providers should start preparing now by considering how their operating models, sponsorship arrangements and regulatory permissions may be affected by a framework focused on what a provider does rather than what kind of institution it is.

South Africa is not moving towards a payment system without banks, but a banking licence may no longer be the default route into payments. If implemented well, the reforms could create a more open, competitive and accessible payments market, in which banks and non-banks are regulated according to the services they provide and the risks they create.

ENDS