Real-time high-volume, low-value payments will soon be a reality in South Africa. With RPP soon coming into effect, banks across the country are in the process of building functionality into their existing systems that will change how consumers transact. The shift away from traditional payment rails is exciting because it brings with it the opportunity for increased innovation. In countries around the world where real-time transactions have taken off, API-based payments have led to more competition and creativity in the banking space, with players being able to offer their customers more dynamic solutions.
A phenomenon like open banking does not provide a mandated way of doing things. Rather, it provides the opportunity to innovate to suit a country’s unique economic, social and political needs. Because similarities exist between similar styles of governance, however, recognised “styles” of open banking have emerged around the world:
- Prescriptive: Regulators require banks to share data with the permission of the customer with newly regulated third party companies
- Facilitative: Regulators issue guidance, recommend standards and release open API standards
- Market-driven: New explicit rules or guidance are avoided where possible, allowing new businesses and partnerships to flourish
The UK follows a highly prescriptive model, which contrasts with Singapore’s approach of more gentle facilitation. The United States has adopted a market-driven approach, while India has used a combination of prescriptive and facilitative approaches in support of entirely different public policy drivers.
This goes to show how fluid open payments are. With the potential to adapt the framework to suit an individual country’s needs, this system can drive economies forward and facilitate greater financial access.
With South Africa getting ready to enter its own era of open payments, it’s important to bear this in mind: While there are many examples to refer to, we cannot simply copy-paste overseas models. Rather, we need to work within our own context and adopt an approach that supports our own policy drivers. Most importantly, this means providing a broad range of South Africans with cost-effective access to financial services – in a way that is aligned with Vision 2025’s goals of financial inclusion – and supporting the modernisation of SA Inc’s banking and payments infrastructure to facilitate economic growth.
How can Electrum help?
While open banking is not yet a reality in South Africa, the new real-time payments system is imminent, with all local banks expected to launch new features that support it in months to come. Once RPP takes off, open banking will be a likely spinoff, which means that planning ahead is key to delivering an excellent service and capturing the market.
In the face of the unknown, working with a technology partner can help you develop an offering that is rock-solid but also agile enough to keep up as new changes are introduced. Electrum has been at the forefront of RPP’s rollout, which has given our team insight into how fast things move in the world of open payments and how best to build innovative solutions.
If you’d like to hear more about how our team can help you get ahead, please reach out to us here.
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