Why South Africa wants fintechs on its payment network

That is Follow the Money, our weekly collection that unpacks the profits, trade, and scaling methods of African fintechs, monetary establishments, corporations, and governments. A brand new version drops each Monday.

South African banks make cash from fintechs that compete with them. A fee corporate or fintech can construct its personal app, to find consumers, and assist companies settle for bills, however still needs to pay a bank to transport that cash in the course of the nation’s monetary gadget.

The South African Reserve Financial institution (SARB), the rustic’s central financial institution, needs to let regulated non-banks do extra of that paintings themselves.

On October 20, SARB governor Lesetja Kganyago said the central financial institution plans to put up a brand new authorisation framework through the tip of November 2026. 

The reforms would permit authorized non-banks to factor digital cash, procedure service provider bills, and get admission to clearing and agreement programs at once, with out a sponsor financial institution.

It places banks’ source of revenue from fintechs up for grabs. South African fee corporations may stay cash they now pay their financial institution companions or use the financial savings to chop charges and win consumers. The selection will decide whether or not opening the gadget makes bills inexpensive or just adjustments who earns from them.

Lesaka Applied sciences, a South African fintech staff serving shoppers and traders, provides a transparent instance of what that dependence prices. 

In its September 2025 earnings call, Ali Mazanderani, Lesaka’s govt chairman, said the corporate paid banks for get admission to to the fee gadget and misplaced out on curiosity it will have earned on cash (deposits) held via the ones partnerships.

Below a sponsorship association, the fintech brings in consumers whilst a financial institution supplies get admission to to the fee gadget and earns a charge for doing so.

Lesaka needs to convey extra of that paintings in-house through obtaining Financial institution 0, a South African virtual financial institution. First announced in June 2025, the deal used to be nonetheless awaiting regulatory approvals in September 2026, with crowning glory anticipated in December.

“The addition of Financial institution 0 will give a boost to our present worth proposition, particularly in our Client trade,” Mazanderani mentioned. 

“With regards to product, it will have to cut back dependencies on 0.33 events, give a boost to our responsiveness to purchasers, building up availability, cut back friction, and amplify the variability of consumers we will cope with. 

“With regards to price, we these days have bills we incur related to financial institution sponsorship each in relation to direct charges and not directly in foregone curiosity or go with the flow income, that have a unfavourable drag on our P&L.” 

SARB’s reforms would give authorized fee corporations direct get admission to with no need to shop for a financial institution. They may then select whether or not to stay paying for sponsorship or tackle the price of connecting and working independently. 

Traders would get advantages if that modify lowers suppliers’ prices and festival pushes them to cross the financial savings on via decrease charges.

Who earns from the client’s fee?

Within the 12 months ended June 2026, Shoprite, South Africa’s greatest grocery store chain through annual income and retailer rely, earned R334 million ($20.2 million) in cash switch commissions, up from R290 million ($17.5 million) the former 12 months. The store operates 2,839 retailers.

It earned every other R214 million ($13 million) from dealing with bills to third-party accounts and insurers, bringing the ones two source of revenue streams to R548 million ($33 million), about 0.2% of the crowd’s general income that 12 months.

This is a small however significant income for the rustic’s greatest store. However for a way smaller fintech with out the similar succeed in, which may be a considerable income, underscoring why corporations out of doors banking desire a larger function in bills. 

Shoprite’s profits display that businesses out of doors banking already generate income through serving to consumers transfer cash and pay expenses.

Alternatively, its buyer accounts nonetheless rely on a financial institution: Shoprite brings its emblem, consumers, and retailer community (succeed in) to the partnership. African Financial institution, a South African lender, provides the banking services and products at the back of Shoprite’s Cash Marketplace Account, which had 4.3 million customers as of June 2026. 

African Financial institution additionally earns from those relationships. In its 2025 effects, the lender mentioned charges and commissions from strategic partnerships helped grow its non-interest source of revenue, along greater use of its transactional accounts and bank cards. 

The lender’s non-interest source of revenue grew through 39% to R2.1 billion ($126.7 million) within the 12 months ended September 2025.

SARB’s reforms would give qualifying non-banks the approach to deal with extra of the fee procedure themselves. 

Licensed corporations may attach at once to clearing and agreement programs, which alternate fee directions and settle cash between establishments, with out a financial institution sponsor.

The monetary alternative is to retain extra of the source of revenue from consumers they already serve. Lesaka has known charges and forgone curiosity as prices of its financial institution partnerships. 

Direct get admission to would permit qualifying fee corporations to interchange some services and products they purchase from banks, whilst taking at the expense of offering the ones services and products themselves.

That provides them two tactics to compete: stay extra money from present transactions or decrease their fees to draw extra trade. 

Traders and shoppers have the benefit of the financial savings when suppliers select the second one choice.

Opening get admission to provides those corporations more space to compete with banks and negotiate with them. 

The monetary incentive would permit non-banks to retain extra of the source of revenue from consumers they already serve.  

Who will pay for a inexpensive fee?

Consumers pays without cost whilst traders quilt the associated fee. Ozow, a South African virtual bills corporate, mentioned it charges traders 1.5% for its Pay through Financial institution and PayShap Request services and products, with a R1 ($0.06) minimal in keeping with transaction. It additionally fees R3 ($0.18) in keeping with payout or refund.

Ozow does no longer rate the client making the fee, however their financial institution might rate them, in step with the corporate. 

Reducing Ozow’s service provider charge would go away the trade with extra money from every sale. Reducing the client’s financial institution charge would make the fee inexpensive for the client. 

Some banks already be offering loose transfers. GoTyme Bank, a South African virtual financial institution, mentioned it charges not anything for PayShap transfers of as much as R5,000 ($302), in step with its web site. 

Transfers above R5,000 ($302) and as much as R50,000 ($3,016) price R7 ($0.42), whilst receiving cash is loose. 

PayShap is the shared instant-payment provider at the back of the ones transfers, however collaborating establishments set their very own buyer costs. The infrastructure permits cash to transport; the supplier comes to a decision what to rate for transferring it.

Direct get admission to would give qualifying non-banks extra keep an eye on over the price of offering those services and products. 

Festival would decide whether or not they use that keep an eye on to decrease service provider fees, be offering consumers extra loose transactions, or retain extra source of revenue.

Worth additionally impacts how steadily other folks use virtual bills. On October 20, Kganyago mentioned PayShap processed handiest about 6% as many transactions as playing cards ultimate 12 months. 

He known pricing, low consciousness, inconsistent services and products throughout banks, and restricted service provider acceptance as hindrances to wider use.

Fee corporations have a explanation why to chop charges if doing so draws sufficient further trade. The chance is to earn much less from every fee whilst dealing with extra of them. Festival may flip better get admission to into inexpensive bills for traders and shoppers.

Changing the financial institution has a worth

Direct get admission to additionally brings bills for fintechs and qualifying non-banks. They may tackle bills their financial institution companions these days deal with. 

SARB’s May draft framework proposes R3 million ($181,000) in preliminary capital for corporations accepting fee directions for traders, and R5 million ($301,692) or R8 million ($483,000) for digital cash issuers (EMIs), relying on their tier. 

They might additionally want programs and body of workers to give protection to buyer price range, stay services and products working, and meet reporting necessities.

Those commitments would decide whether or not direct get admission to prices not up to financial institution sponsorship. Greater suppliers may unfold the expense throughout extra transactions; smaller fee corporations and non-banks would possibly nonetheless discover a financial institution partnership inexpensive.

The reform provides fee corporations a decision over how they function. Financial savings start handiest when doing the paintings themselves prices not up to paying a financial institution.

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