What is South Africa’s New Interbank Payments Platform, PayShap?


South Africa has reported a major step in the payments industry following the launch of PayShap yesterday, which is a collaboration between the South African Reserve Bank (SARB), BankservAfrica, and four major banks.

The payment channel or platform is immediately available for customers of FNB, Absa, Nedbank, and Standard Bank.

PayShap customers are now able to send and receive money using their phone number as a placeholder for their bank account number.

According to reports from multiple publications, the first phase of the PayShap launch includes the instant clearing feature with pay-by-account and pay-by-proxy services.

The second phase of the launch will introduce a request-to-pay function that will enable users to initiate payment requests.

What PayShap does, and what it doesn’t

PayShap enables bank account holders to send and receive up to R3,000 (a little over KES 21,000) per transaction instantly. We are not sure if this is a daily limit or the maximum limit that can be sent in one instance.

The service is accessible through mobile and digital banking channels, and more banks are expected to join the system soon.

The introduction of PayShap aligns with the SARB’s Vision 2025 plan for safer, faster, more inclusive, and cost-effective payment solutions.

The service aims to promote financial inclusivity in South Africa, with the potential to benefit small businesses and merchants.

PayShap ID payments by phone number proxies will make payments easier by reducing the need for exchanging account numbers.

However, PayShap is not a standalone app and is only accessible through existing banking channels.

The payment system is the result of a collaboration between financial sector players, and it is not a directive of the SARB.

PayShap represents an opportunity to move away from cash transactions and marks a significant milestone for the country’s financial industry.

Bank payments over mobile money

Southern Africa, of which South Africa is a part, is known for preferring banking solutions over mobile money services. The same can be said for other parts of the continent, except for East Africa where millions of people use mobile money services more than banking solutions or payment channels, thanks to deeper penetration of such services that are mostly offered by telcos like M-PESA, Airtel Money, and others.

Specifically, by the end of 2021, Eastern Africa had the highest number of active mobile money users among all African regions, with a total of 102 million active accounts. On the other hand, about 194 million accounts were considered inactive during the same period.

Over the same period, Eastern Africa recorded the highest value of mobile money transactions, with a total of 403.4 billion U.S. dollars. In comparison, the total value of mobile money transactions in all four African regions amounted to 701.4 billion U.S. dollars throughout the year.

What’s more, Eastern Africa had the highest number of mobile money transactions, with 24 billion transactions made by users, surpassing any other region in Africa. In total, the continent recorded 36.7 billion mobile money transactions.

Finally, the launch of PayShap can be seen as a response to counter the increasing risk in the retail banking sector in South Africa,  where the ‘four universal banks’ (namely Absa, Standard Bank, Nedbank, and FirstRand) have been continuously exploring innovative strategies to ensure their continued significance in the industry.