South Africa strives to achieve e-commerce (electronic payment) in the local payment market this year 2020. This shows that South Africans are finally flowing with the digital age, expanding rapidly to include fintech, telecoms companies, and even retailers.
The European Union’s (EU’s) revised Payment Services Directive (PSD2) – also known as open banking has set a directive that is set to modernize payments through landmark changes to the manner in which banks engage with non-banking institutions.
What is notable here is the requirement for banks to provide third-party providers with secure access to client accounts in order to improve service offerings to clients. This regulation is to ensure the credibility of fintech operating in the EU payments sphere and enhance the products and services they offer to consumers and to ensure South Africa strives to achieve e-commerce in 2020 is sustainable.
Elevating standards and regulations
At the local level, progress is geared towards a broader competitive payments industry that is similar to the EU, of which the most significant is the increased engagement of the South African Reserve Bank and the Payments Association of SA (Pasa) with non-banking fintech. This engagement is set to develop standards and regulations around the digital payments industry. It’s going to drive strong growth in the payment sector, and ultimately create a platform for increased financial inclusion in the nearest future.
Many consumers prefer to use cash, in spite of the security risks associated with it which is rather unfortunate. This will open a new payment option for them and drive more widespread use of digital payment products which will make it easier for customers to pay for your products and services.
The Vision 2025 of the central bank aims to open up the competitive payments landscape dramatically by allowing fintech to engage more openly with traditional payment providers, like banks. The advent of open banking will be a huge step forward, by giving non-bank institutions a secure channel to the banks, as it was which, in keeping with the benefits of PSD2 across the pond, will assist fintech in improving the quality of their payment services to consumers, and increase consumer acceptability of fintech offerings in the South African market.
Pasa is also working closely with the industry service providers to create standards around processing payments securely, and to work rogue elements out of the industry.