Introduction
South Africa is currently transitioning its regulatory landscape to support increased access to the National Payment System (NPS) and to adopt activity-based licensing and regulation for payment service providers. The Payments Association of South Africa (PASA), a private sector association, has managed the country’s domestic payment systems for almost 27 years by regulating and organising banks and designated participants, as well as clearing operators, and by providing NPS participation criteria and rules.
PASA’s mandate is currently entrenched in the NPS Act, where provision is made for a Payment System Management Body (PSMB) and in terms of which the South African Reserve Bank (SARB) subsequently recognised PASA as a PSMB in 1997. Presently, in anticipation of new legislation which will no longer incorporate the concept of the PSMB, PASA finds itself facing a new challenge: to transform into an inclusive Payments Industry Body (PIB) tasked with maintaining and ensuring interoperability in the South African NPS.
PASA and the SARB recognised that to remain relevant and sustainable, the NPS management structures need to be inclusive of all payment participants and service providers, not only to prevent fragmentation of the payment systems, but also to leverage the power of payments digitalisation and modernisation to better serve the needs of the economy and society in general and, specifically, to support financial inclusion. As one of the management structures within the NPS, the PIB will not be explicitly provided for in the updated NPS Act, but it is anticipated that the SARB will provide recognition via the alternative mechanism of licensing. However, and perhaps because the PIB role will not be “mandated” through legislation, it became clear that all potential participants had to have a voice in defining the PIB functions, scope, and design.
In traditional South African style, PASA, together with the SARB, decided that the best way to design a new, inclusive PIB was to invite all interested stakeholders into a broad-based design process, so that the resulting PIB design would meet the needs of all and ensure buy-in and support from a large, diverse payments community.
To that end, over a period of almost a year, PASA, with the support of PwC South Africa, facilitated 259 participating organisations through 55 hours of industry workshops, covering over a thousand content slides, and ultimately produced a Design Report, which was formally presented to the SARB on behalf of the broader payments industry in November 2022.
The SARB is finalising its review of the Design with a view to providing a “no objection,” after which, the transition from PASA to the PIB will be implemented in support of the pending changes to the South African regulatory framework.
So, what does it take to run an inclusive design process of this nature and is it worth the effort?
Leading Up to the Design Process
Despite PASA’s acknowledged record of accomplishment and value to the NPS, planned policy reforms, first discussed in 2016, were unclear whether there was indeed a role for a Payments Association with any form of mandatory participation or regulatory recognition. While all parties recognised the need for payment system participants to organise themselves and their participation, the early thinking was that a trade association structure would suffice to ensure interoperability under the regulation, supervision, and oversight of the SARB.
By 2021 this view had evolved to recognise that …
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