South Africa’s financial sector has taken a huge step towards modernising the country’s payment ecosystem with the adoption of a new global messaging system, says the South African Reserve Bank (SARB).
The new system has been adopted into the current real-time gross settlement (RTGS) system. Participant banks and other financial market infrastructures (FMIs) have also adopted the new system.
Upgrading SARB’s real-time gross settlement (RTGS) system aims to:
- Reform and modernise both domestic and regional payment settlement services;
- Facilitate wider access to the payments system;
- Improve efficiency by leveraging new technology and:
- Address the security risks posed by cyber threats.
Internationally the financial messaging standard ISO 20022, which has now been adopted, is expected to underpin all high-value payments in reserve currencies by 2025.
The ISO 20022 will introduce a harmonised message exchange mechanism for payment across the globe, allowing for richer, better-quality data in payment processing and settlements, the central bank said.
SARB said this change has been necessitated by the rapid development of disruptive technology, evolving cyber-threats, increased regulation and demands from customers for faster, more cost-effective payments.
This forms part of SARB’s greater efforts to modernise, as outlined in the National Payment System Framework and Strategy/ NPS Vission 2025. The central bank has been on a drive to change how it deals with new types of transactions and an ever-evolving economy.
“The evolution of payment technologies over the last few years has made the modernisation of retail and wholesale system infrastructures a key priority,” said Lesetja Kganyago, the governor of SARB, at a general meeting in July of this year.
According to Kganyago, it will also improve the delivery of payment services and solve issues with accessibility, swiftness, cost, and transparency of payments for both payment service providers and customers.
“The migration will also pave the way for faster payments through the introduction of the Rapid Payments Programme (RPP), which is expected to be launched in 2023.
The RPP, to be launched under the brand Payshap, is an industry-led initiative under the leadership of BankservAfrica and the Payments Association of South Africa (PASA), said the Reserve Bank.
SARB said that when it rolls out, the RPP will offer a cost-effective instant payment service across banks, a proxy service to embed user banking details, a request to pay service, as well as support for several known retail payment use cases.
SARB is collaborating on many projects with the Intergovernmental Fintech Working Group in order to adapt to market changes and welcome innovation in the fintech sector (IFWG).
Initiatives include the commitment to bringing crypto-assets into the regulatory ambit given the growth and proliferation of the assets and the resulting risks they pose in the form of illicit financial flows, among others, added Kganyago.
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