The South African Reserve Bank has released the third draft of proposed amendments to South Africa’s payments regulatory framework, signalling a significant shift in how payment activities could be regulated.
Source: Supplied. Lerato Lamola is a partner at Webber Wentzel.
The proposals include a draft exemption notice for certain payment services and a revised activity-based Authorisation Framework, with stakeholders invited to comment by 15 June 2026 before the rules are finalised.
This development builds on earlier rounds of consultation and builds on the Sarb's work under the Payment Ecosystem Modernisation (PEM) programme.
Under the current regime, activities involving the pooling of public funds, including e-money issuance and money remittance, have generally fallen within the definition of the “business of a bank”.
This has meant that non-bank providers typically rely on bank sponsorship arrangements to participate in the national payment system (NPS). The amended regulatory framework will allow for both payment institutions who wish to be sponsored and those who wish to be authorised in their own right.
The current amendments will be published under the existing regulatory framework. The draft Authorisation Framework directive will be published under the National Payment System Act (NPS Act), and the draft exemption notice will be published under the Banks Act.
Defining payment activities
The draft Authorisation Framework reportedly outlines the activities that would fall within the definition of “payment activity” requiring authorisation and identifies several key concepts and definitions for industry participants to consider.
These include acquiring of payment instructions, described as services enabling payment institutions to accept and process payment instructions on behalf of payers or payees, ultimately facilitating the transfer of funds regardless of the payment instrument used.
The framework is said to retain the definition of clearing and settlement as provided for in the National Payment System (NPS) Act, while distinguishing between closed-loop and open-loop payment systems.
A closed-loop payment system is described as one operating within a limited network or ecosystem under a single service provider, whereas an open-loop system reportedly enables interoperable payments between multiple institutions and broader end-user access.
Kim Rew & Jered Shorkend 13 Apr 2026 Crypto assets are defined, for the purposes of the framework, as digital representations of value not issued by a central bank but capable of being electronically transferred or stored for payment purposes, using cryptographic techniques or distributed ledger technology. E-money is described as a digital store of fiat currency value that constitutes a claim against the issuer and can be redeemed at face value, including mobile money but excluding crypto and tokenised assets.
Payments framework overhaul
The framework further explains mobile money as a form of e-money accessed through mobile devices or networks, while money remittance is described as the transfer of funds within South Africa, either through accounts or standalone transactions, for the purpose of passing funds between payers and payees.
Other definitions reportedly cover payer service providers, payment execution, payment initiation, payment instructions, payment instruments and payment systems, as well as governance mechanisms such as schemes and scheme managers.
Additional concepts include segregated accounts, sponsorship arrangements granting indirect access to the national payment system, third-party payments and third-party payment providers, alongside tokenised assets, defined as digital representations of traditional assets on programmable platforms.
At the centre of the regulatory reform is an activity-based approach, where regulation attaches to the nature of the payment activity rather than the type of institution performing it. In practical terms, this allows both banks and non-banks to offer payment services, provided they meet the relevant regulatory requirements.
Structured regulatory scope
The draft Authorisation Framework itself is detailed and establishes a structured regime for how payment activities are conducted within the NPS. It applies to any person, bank or non-bank, seeking to perform defined payment functions, and sets out clear pathways for authorisation, designation and registration. It also introduces ongoing compliance obligations, alongside enhanced supervisory and enforcement powers for the Sarb.
The framework reportedly places strong emphasis on the functional classification of payment activities, categorising them into several areas. These are said to include the issuing of e-money and payment instruments, the acquiring of payment instructions, clearing and settlement, payment initiation, third-party payments, scheme management, and money remittance.
This modular structure enables regulation to be calibrated to the specific risk profile of each activity. It should be noted that crypto assets and tokenised assets are excluded from the definition of e-money. It should be further be noted that the draft Authorisation Framework only applies to domestic payment activities. Cross-border payment activities are specifically excluded.
Although the exclusion section specifically excludes close-loop payment systems and activities from the scope of the draft Authorisation Framework in paragraph 4.3.4, the draft Authorisation Framework goes on to provide registration requirements for closed-loop payment systems and their activities as well as a full scope of ongoing compliance obligations. The Sarb will need to provide clarity on the treatment of closed-loop systems and activities in the final draft.
The draft Authorisation Framework reportedly states that, once implemented, it would replace and repeal in full several existing regulatory instruments. These are said to include the Directive for Conduct within the National Payment System in Respect of Payments to Third Persons (Directive No. 1 of 2007), the Directive in Respect of Issuing of Electronic Funds Transfer Credit Payment Instructions on Behalf of the Payer in the National Payment System (Directive No. 2 of 2024), and the Position Paper on Electronic Money (Position Paper No. 1 of 2009).
Proportionate oversight model
The framework introduces comprehensive baseline requirements such as minimum capital thresholds, ongoing capital buffers linked to transaction volumes or liabilities, and strict safeguarding rules for client funds, including segregation from institutional assets. Governance standards, fit-and-proper requirements, risk management controls, cybersecurity obligations, and compliance with anti-money laundering and counter-terrorist financing frameworks form central pillars of the regime.
Importantly, the framework also adopts a proportionate approach in certain areas. Defined thresholds will determine when these activities transition into the fully regulated environment, reflecting an effort to balance oversight with innovation. The trigger to apply for authorisation being linked to transaction volumes over specific periods.
From a policy perspective, the reforms are aimed at strengthening competition, improving financial inclusion and supporting innovation within the payments ecosystem. By lowering barriers to entry for non-bank participants and enabling new business models, the SARB is positioning the NPS to better accommodate fintech development and evolving consumer needs, while maintaining system integrity, safety and efficiency.
For market participants, the consultation underscores the need for a careful assessment of the proposed framework. This includes determining how activities are classified, understanding the implications of direct authorisation, and considering how existing bank-led arrangements may need to evolve.
As the consultation period closes in mid-June, stakeholders are encouraged to engage substantively with the proposals. The final framework is expected to have significant implications for banks, fintech firms and other payment service providers, shaping the structure and competitiveness of South Africa’s payments landscape for years to come.
The Sarb has indicated in industry discussions that it seems to publish the final version of the Authorisation Framework in quarter 3 of 2026, so it is assumed that this will be last opportunity for industry participants to comment.
