PayShap – South Africa’s first rapid payments programme is now available

 The South African Reserve Bank (SARB) is credited with launching the real-time, convenient payment platform PayShap in March 2023. PayShap's goal is to provide people in South Africa access to safer, quicker, and more convenient payment options.

The South African banking industry, the Payments Association of South Africa, and BankservAfrica collaborated to create PayShap with the goal of bringing the country's payments business into the modern age. It was developed as part of the Vision 2025 initiative to revamp the infrastructure of the South African national payment system and has its roots in the South African Reserve Bank's Rapid Payments Program.

The South African Reserve Bank (SARB) expects PayShap to one day offer a low-cost, cross-bank immediate payment service, a proxy service that lets customers use their existing banking credentials, a request-to-pay service, and support for various standard retail payment use cases. This solution helps bridge the gap between the incompatible payment systems of different banks by facilitating the use of Transactions Cleared on an Immediate Basis payments platform.

The reduction in the quantity of information required for payments is one of the benefits that customers will see most immediately in their day-to-day lives. At launch, PayShap users will have access to the platform's real-time payment feature, which will allow them to send money to others instantly using their own bank details or those of a third party identified by a unique identifier called a ShapID. A person's ShapID might be anything from their mobile phone number to a unique code issued by their bank. This single digit would represent the whole of the person's financial status. Compared to, say, the tedious data necessary for electronic money transactions, these IDs are far easier to exchange and utilize. Manual input of data is still required for electronic money transfers, including branch codes, payee names, and account numbers. These IDs, on the other hand, are far less complicated to implement and disseminate.

Until recently, the only people who could take advantage of the speed of electronic payments were those who owned a credit card, used a payment solution provider, or had an open banking provider. PayShap, on the other hand, is a collaborative effort across several industries, making it more widely available to South African customers. A major step for an economy like South Africa's is PayShap's aim to reduce the reliance on cash for transactions of lower value. More than half of all transactions are still conducted using money, according to recent statistics published in the 2020 Worldpay Global Payments Report; in the informal sector, this proportion jumps to almost 90%. Reports indicate that when PayShap starts, it will provide real-time clearance of low-value transactions up to a limit of ZAR 3,000.

In the next phase of the service's evolution, a feature called "request-to-pay" will be included. Customers may use this feature to submit a payment request and have the funds deposited securely into their accounts instantly. With PayShap, the receiver of funds retains authority over whether or not to accept the payment, as opposed to the case with debit-pull payment systems. Because of this, dealings may be made with more peace of mind. BankservAfrica, effectively a centralized clearinghouse, will be in charge of handling all monetary transactions. The service will save you money compared to using a traditional bank.

Another positive outcome of implementing PayShap will be a more consistent use of international standards for monetary discourse. In 2018, the South African Reserve Bank (SARB), participating banks, and other financial market infrastructures accepted the International Organization for Standardization financial messaging standard (ISO 20022) for use in processing high-value payments within the domestic market, and the PayShap platform is fully compatible with the requirements of ISO 20022. ISO 20022 financial messaging facilitates communication between corporations and banking systems by providing a framework for exchanging information in a structured and data-rich format. ISO 20022 will become the de facto messaging standard for transactions of this kind by 2025, when most of the world's most significant reserve currencies have made the switch. By contributing to this worldwide harmonization effort, South Africa will strengthen its ability to participate in the expanding ecosystem as it evolves.

The payments sector in South Africa, which is a key element of the financial technology sector in Africa, is experiencing a period of rapid growth. At the same time, the PayShap platform has just gone live. In light of the ever-increasing demands of international standards, this new development indicates a progressive approach on the part of local policymakers and the industry, and it will hopefully lead to more dynamism in the sector and wider access to the country's fintech products and investment opportunities. However, this might have a significant impact on the financial technology (fintech) sector. A number of thriving fintech companies have filled the voids in the banking sector's digital payments infrastructure with their own innovative payment systems. The debut of PayShap may change or enhance some of the South African payments business models in the future, but it is too soon to tell whether or how this will affect the consolidation of players in an already crowded payments market. Meanwhile, keep in mind that the South African payments market is very competitive.

What is most exciting is that payments between separate banks used to take a day or two to credit. Now it's a matter of seconds. We are able to attend and respond to emergency situations quicker. Small businesses will will be able to pay their employees quicker now.