The National Payment Systems Act 78 of 1998 (NPS Act) provides for the management, administration, operation, regulation and supervision of the payment, clearing and settlement systems in South Africa. The SARB is the overseer of the national payment system.
Apart from the Bills of Exchange Act 34 of 1964, payment methods are not specifically regulated by legislation. Payment methods include electronic transfers, cards, cheques, debit orders and ATMs or mobile devices. The NCA specifically allows debit order payments and regulates their content.
The SARB issued a position paper on virtual currencies in December 2014, which highlighted several risks associated with the virtual currencies landscape, particularly digital currencies, and provided a cautionary note to users. The SARB remains of the view that currently virtual currencies (VCs) pose no significant risks to financial stability, price stability or the national payment system (NPS).ii Recent developments
The National Payment System Department of the SARB published a policy paper on the 'Review of the National Payment System Act 78 of 1998' in 2018 (the NPS Policy Paper). The NPS Policy Paper contains several recommendations, including:
- The NPS Act should enable the ability to consider and adopt, where appropriate, international standards and principles to the extent that it is appropriate to South Africa and does not stifle innovation.
- The primary objects should be stated as promoting the financial stability, safety, efficiency (including interoperability), transparency and integrity of the NPS; the safety and soundness of payment institutions and activities; and confidence in the NPS.
- The secondary objects should be stated as the prevention of financial crime, promotion of financial inclusion and support of the FSCA in its consumer protection objective.
- The SARB should be responsible for licensing all entities that provide payment services and operate payment systems, after consultation with the FSCA.
- It is recognised that in future the SARB may wish to allow or require settlement of other emerging currencies, such as central bank digital currencies and VCs, or designate other settlement systems, and the NPS Act should be enabling in this regard, with specific requirements being provided for in subordinate legislation.
- The provision of retail payment services and activities (e.g., remittance services, e-money, mobile money) where money is not due to a third party should be allowed, whether the entities providing such services are banks or non-banks. Such entities should be exempted from the definition of the business of a bank in the Banks Act 94 of 1990 and be subject to a risk-based and proportionate regulatory, supervisory and oversight framework. This could also be effected through an amendment to the Banks Act and necessary provisions in the NPS Act, while at the same time maintaining financial stability.