”South Africa is preparing to give licensed non-bank businesses, including fintech companies, telecommunications operators and retailers, direct access to its national payments infrastructure from 2027, potentially increasing competition with established banks. The South African Reserve Bank’s wider modernisation programme also targets cheaper digital transactions, improvements to instant payments, stronger digital identity verification and more efficient access to cash.”

South Africa’s banking industry faces a major shake-up as Reserve Bank opens the door to fintech competition

South Africa’s banking sector is preparing for a significant change as the South African Reserve Bank (SARB) advances plans to allow appropriately authorised non-bank companies to connect directly to the country’s national payments infrastructure. The proposed reform could reshape how money moves between individuals, businesses and financial institutions, while creating new opportunities for technology companies, telecommunications operators and retailers to compete in the payments market.

The initiative forms part of the Reserve Bank’s Payments Ecosystem Modernisation programme, which aims to improve competition, reduce transaction costs, expand digital financial services and make payments more accessible. Although the broader banking industry will continue to play a central role in the economy, the proposed changes could reduce its traditional control over the infrastructure used to process payments.

 new era of competition in South African banking

For many years, South Africa’s commercial banks have occupied a central position in the national payments system. Businesses and consumers have relied on bank accounts, cards, electronic funds transfers and bank-linked payment services to send, receive and manage money.

Under the proposed reforms, licensed non-bank providers would gain a more direct route into the national payments infrastructure. This would allow eligible businesses to conduct specified payment activities without necessarily depending on a traditional bank to provide access to the underlying system.

The change is important because payment processing is a foundation of modern commerce. Every time a customer pays a retailer, a small business receives money from a client or an individual transfers funds to a family member, payment infrastructure helps move the money securely between participants.

Opening that infrastructure to additional providers could encourage businesses to develop new services and compete on price, convenience and functionality. It could also give consumers more choice about how they pay for everyday purchases.

According to reporting on the Reserve Bank’s plans, the central bank intends to publish the relevant authorisation rules and exemption framework by the end of November 2026. Initial non-bank participation is expected to begin in 2027, following licensing, testing and technical integration.

Why the reform matters to consumers

For ordinary South Africans, the most important question is whether the changes will make payments cheaper, easier and more reliable.

Banking charges can influence the way people manage their money, particularly those who make frequent small transactions. For a household living on a tight budget, repeated fees can reduce the amount available for food, transport, electricity and other necessities.

Small businesses face similar challenges. Market traders, informal retailers, independent service providers and other micro-enterprises may operate with narrow profit margins. When accepting electronic payments requires expensive equipment or complicated arrangements, some businesses may continue to rely heavily on cash.

Greater competition could encourage providers to offer alternative payment products with simpler pricing and more convenient ways to accept money. However, lower fees are not guaranteed simply because more companies gain access to the system. The actual effect will depend on competition, regulation, business costs and the prices providers ultimately charge.

The Reserve Bank has therefore emphasised the need for proportionate regulation that supports innovation while addressing the risks associated with payment services. The intention is to avoid applying identical regulatory requirements to businesses that perform different functions and present different risks, while still protecting consumers and the wider financial system.

Fintech companies and telecommunications operators could benefit

Fintech companies are among the businesses likely to watch the reform closely. These firms use technology to provide services such as digital wallets, electronic payments, payment initiation and merchant solutions.

Direct access to national infrastructure could give authorised fintechs greater flexibility to design products and reduce their dependence on banking intermediaries. They may be able to build services aimed at specific groups of customers, including small merchants, online sellers and consumers who need low-cost ways to transfer money.

Telecommunications companies could also play an important role. Their existing customer relationships and digital platforms may help them distribute payment services to people who do not frequently use traditional banking channels.

Retailers could benefit as well, particularly if they develop integrated payment products that connect shopping, money transfers and other financial services.

Nevertheless, participation will require more than a customer base or a smartphone application. Providers will need to meet the applicable authorisation requirements and demonstrate that their systems can process transactions securely and reliably. Their business models will also need to address fraud prevention, operational resilience, customer complaints and the protection of funds.

For established banks, the development presents both a competitive challenge and an opportunity. Banks could face pressure to improve their pricing and customer experience, but they may also work with fintechs and other businesses to provide services, infrastructure and financial products.

The reform should therefore be understood as a change in the structure of the payments market, rather than the disappearance of banks from South African finance.

PayShap and the challenge of making instant payments mainstream

One of the central issues in South Africa’s payments modernisation programme is the adoption of PayShap, the instant-payment service launched in 2023. The platform allows participating customers to send and receive money quickly through supported banking channels.

Despite its potential, PayShap has faced challenges in becoming a routine payment method for all consumers and businesses. The Reserve Bank has identified differences in functionality, transaction limits, pricing and customer experience as issues that need attention.

Business Day reported on 20 October 2026 that PayShap had processed more than one billion transactions worth over R1 trillion since launch. Nevertheless, Governor Lesetja Kganyago indicated that adoption remained below the level needed for instant payments to become a widespread alternative to cash.

The challenge is not simply to make payments faster. Consumers also need to understand how the service works, know what it costs and be able to use it at the businesses where they shop.

For example, a customer may be willing to use an instant-payment service to transfer money to a friend but still prefer cash when purchasing groceries from a small shop. If the merchant cannot easily accept the digital payment, the service will have limited usefulness for everyday commerce.

The Reserve Bank wants to address these barriers by encouraging more consistent experiences across participating institutions. This could make the service easier to understand and help customers compare payment options.

Affordable pricing will also matter. If small transactions carry charges that customers consider excessive, they may continue using cash or alternative payment methods. Conversely, transparent and competitive pricing could make digital payments more attractive for frequent, low-value transactions.

The success of PayShap will ultimately depend on whether consumers and merchants find it useful, accessible and affordable—not merely on the technical capability to transfer money instantly.

QR payments could help smaller businesses accept digital money

Another component of the modernisation programme is QR+, an initiative intended to improve interoperability between QR-code payment services.

QR codes allow customers to scan a code using a supported device or application to initiate a payment. For merchants, this can provide an alternative to more expensive payment-acceptance equipment, depending on the provider and arrangement.

A common interoperable approach could be particularly useful for small businesses that cannot justify the cost of traditional point-of-sale terminals. Informal traders, street vendors and independent service providers may be able to accept electronic payments more conveniently if customers can use their preferred supported payment service.

The Reserve Bank has indicated that an interoperable QR+ pilot is planned for the first quarter of 2027. Its broader aim is to make digital payments easier to accept across different providers and business environments.

For the reform to deliver meaningful benefits, the system will need to work reliably across participating services. Merchants must be able to verify payments, customers must understand when transactions have succeeded, and both parties need clear procedures for handling mistakes or disputes.

Security is equally important. A QR code can be misused to direct a customer to a fraudulent destination or to misrepresent a payment request. Providers will need safeguards that help customers verify the recipient and confirm that funds have reached the intended account.

If these practical issues are addressed, interoperable QR payments could help bring more small businesses into the digital economy.

Digital identity and access to financial services

The Reserve Bank’s plans also include work on digital identity verification within the payments ecosystem.

Identity verification is an important part of financial services because providers must establish who their customers are and comply with applicable legal requirements. However, repeating verification procedures across different services can create friction for consumers and businesses.

A reusable, verifiable digital identity could make onboarding more efficient where appropriate legal safeguards and customer consent are in place. Instead of repeatedly submitting information, customers could potentially reuse trusted credentials across participating services.

This could be useful for small businesses that want to accept digital payments or expand their access to financial products.

There is also a possible longer-term connection between digital payments and access to credit. Businesses that operate primarily in cash may have limited formal records of their sales and cash flows. Digital payment histories, when collected and used lawfully, could help demonstrate trading activity and provide additional information for lenders assessing applications.

However, a digital transaction history would not automatically guarantee a loan. Credit providers would still need to assess affordability, repayment capacity and other relevant information.

Privacy and data security must remain central to any digital identity system. Customers need to understand what information is being shared, who can access it and how it will be used. Strong safeguards are necessary to prevent misuse, unauthorised disclosure and discriminatory decisions.

South Africa still needs an affordable cash infrastructure

Although the reform places considerable emphasis on digital payments, the Reserve Bank is not treating cash as obsolete.

Cash continues to serve households and businesses that face barriers to digital financial services. It can be particularly important where connectivity is unreliable, digital skills are limited or customers prefer physical money for budgeting and everyday transactions.

Business Day reported that a Reserve Bank study estimated cash accounted for approximately 56% of consumer transactions by volume, with an annual economic cost of about R88.5 billion. These figures help explain why policymakers are looking at the cost of maintaining the cash system alongside the expansion of digital alternatives.

The central bank has proposed a national cash utility to improve the efficiency of cash handling and distribution. It has also proposed a shared, or white-label, ATM model intended to help reduce costs and preserve access to cash.

Under such a model, ATM infrastructure could serve customers across participating institutions instead of being operated exclusively around individual banks’ networks. The Reserve Bank has outlined plans for a pilot in January 2027, followed by a broader rollout intended by the end of that year.

The implementation details will matter. Shared infrastructure must remain secure, accessible and operationally reliable. Communities that depend on cash need practical access to withdrawals and, where supported, deposits and other basic services.

The wider objective is to improve efficiency without leaving vulnerable customers behind.

Risks and regulatory challenges facing the banking industry

The proposed reforms could create substantial opportunities, but they also introduce risks that regulators and payment providers will need to manage.

The first is cybersecurity. As more companies connect to national payment infrastructure, the number and variety of systems participating in the ecosystem will increase. Providers will need robust security controls, fraud monitoring, incident-response procedures and measures to protect customer information.

The second is operational resilience. Payment systems must remain dependable because interruptions can affect retailers, households and businesses across the economy. Clear standards for service continuity, technical integration and incident reporting will be important.

The third is consumer protection. Customers should know which organisation provides a payment service, how complaints are handled and what happens when a transaction fails or funds are sent incorrectly. The entry of new providers must not create confusion over responsibility.

There is also a question of competition. Opening infrastructure to new participants does not automatically guarantee a competitive market. Licensing conditions, access fees and technical requirements must be designed so that qualified new entrants can participate without compromising the system’s safety.

These considerations explain why the Reserve Bank’s authorisation framework will be a significant milestone. The challenge is to create a system that is open enough to encourage innovation but sufficiently regulated to maintain public confidence.

What happens next?

The next important step is the planned publication of the authorisation framework by the end of November 2026. That framework should provide greater clarity about which activities non-bank providers may undertake and the requirements they must meet.

Initial participation is expected to involve licensing, testing and technical integration before the wider rollout in 2027. Meanwhile, the development of QR+ and improvements to PayShap will help determine whether the new infrastructure translates into practical benefits for consumers and merchants.

Banks, fintechs, retailers and telecommunications companies will need to assess how the changes affect their business models. Consumers should look for clear information about pricing, security and the services available to them as new products emerge.

The Reserve Bank will also need to monitor whether the changes improve competition in practice. Relevant indicators include transaction costs, service reliability, merchant acceptance, customer adoption and access to payments among underserved communities.

Conclusion: A turning point for South African banking

South Africa’s planned payments reforms represent a major development for the country’s banking industry. By allowing appropriately authorised non-bank providers to access national payment infrastructure, the Reserve Bank aims to encourage competition, support innovation and make digital payments more accessible.

For consumers, the potential benefits include more payment options and improved convenience. For small businesses, interoperable payment services could make accepting digital money easier. For established banks, the changes could increase competitive pressure while creating opportunities for collaboration with technology companies.

However, these benefits will depend on implementation. Affordable pricing, strong cybersecurity, clear consumer protections and reliable infrastructure will be essential. The continued importance of cash also means that modernisation must accommodate customers who cannot yet rely entirely on digital services.

As South Africa moves towards the planned 2027 rollout, the most important measure of success will be whether the reforms deliver safer, more affordable and more inclusive payments in everyday life.