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- Payshap launched on Monday, bringing a five-year development journey to fruition.
- Banks say it will be the cheapest way to send money immediately, and will be even cheaper than their own instant money services.
- Recipients don't need to have bank accounts, just phones. But you can't reverse a payment once made.
- For more financial news, go to the News24 Business front page.
SA's new instant digital payment system is at least six times faster than banks' current instant payment services, and will still be cheaper, too.
And you don't even need a bank account – a cellphone is enough ID for Payshap.
"We wanted it to be cash-like. With cash, when I give you a R50 note, it is in your hand instantly. One of the things that deter people from utilising digital services is the wait," said SA Reserve Bank's deputy governor and the CEO of the Prudential Authority, Fundi Tshazibana.
READ | On Monday, a new payment system will be launched in SA - what you need to know
Payshap CEO, Jan Pilbauer, said in the five years it took to produce Payshap, they left "no stone unturned" to ensure that it can be the cash equivalent that people who've refused to transact digitally can trust.
SA remains a cash-dominant economy, despite the creation of instant money transfers, the growth of payment providers that service the informal market like iKhokha, and the proliferation of digital wallets by various banks and fintech players.
Tshazibana said most people still prefer to take their cash in hand, particularly domestic workers, hawkers and people living in townships and rural areas. Many are concerned about bank charges. Furthermore, with money in the bank, it takes money to get it out because they have to travel to get to ATMs.
Banks at the launch said Payshap will be cheaper than their current instant money or immediate transfer services.
"It doesn't matter who you bank with, whether you decide to hold your money or what you want to pay for … Payshap has been built with the end-user in mind," said Pilbauer.
"We had to build a payment system different from everything we've built in the past," said BankservAfrica's head of real-time payments, Mpho Sadiki.
He said BankservAfrica, which is SA's clearing house for all bank transactions, has observed that people go as far as choosing who to bank with or which account to use for payments and receipts based on when the money will reflect on their accounts.
FNB EFT Product House CEO, Ravi Shunmugam, said that to make sure this system can compete against the much-loved cash in SA, they went to markets like Mumbai and Singapore, ensuring it is benchmarked against the best payment systems in the world.
"If you are truly going to tackle cash, you have to deliver that payment system where when a person says I've sent you money, I can see that I got it. That's the only way," added Sadiki.
BankservAfrica championed the development of Payshap, working with the Payment Association of SA and the Big Four banks – Absa, FirstRand, Nedbank and Standard Bank. That's why some of the Big Four were ready to launch their Payshap offering immediately on Monday, even though some apps had "technical difficulties". Others, like Absa, hadn't integrated Payshap into their apps at the time of publication.
The launch of Payshap also marked the first time SA embraced a payment system based on the cloud. It also uses distributed ledger technology and the Amazon Web Services cloud platform.
But take caution
Speaking to News24 before the launch, Absa Everyday Banking CEO, Cowyk Fox, said one thing to be aware of is that once the payment is made, there's no reversing it. Banks can't reverse Payshap transactions because they are as instant as it gets. It's different from EFTs, where there's still some time as the money lingers in the system after payment.
"This one is like cash. Once you've handed it over, it's in someone else's hands. So, you've got to be careful. Don't rush when making payments, and watch out for scammers," he said.
BankservAfrica said it gave a lot of thought to minimising the fraud risk and the possibility of it being used in other financial crimes in the Payshap system. Keeping the maximum payment at R3 000 was one of those "prudent" moves. The system also has real-time monitoring of transaction activities and a system to flag suspicious transaction values.
"What we've built in, we believe it's at the right level to manage any fraud that might be perpetrated in the system [although] you can never truly eradicate all fraud," he said.
