The South African Reserve Bank (SARB) has published the third version of its proposed amendment to the payments regulatory framework. 

The amendments focus on two key instruments, a draft exemption notice that would exclude certain payment activities from constituting “the business of a bank”, and a revised draft Authorisation Framework set out in a draft directive introducing a comprehensive activity-based regulatory regime. Stakeholders have until 15 June 2026 to submit comments, marking a final opportunity to influence what is expected to become a foundational framework for the future of payments in South Africa.

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. 

The draft Authorisation Framework sets out the activities that fall within the definition of "payment activity" requiring authorisation. Some critical concepts and definitions that the industry should note and consider from the draft Authorisation Framework include:

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.

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.

A notable feature of the framework is its functional classification of payment activities. These include:

• issuing of e-money and payment instruments,
• acquiring of payment instructions,
• clearing and settlement,
• payment initiation,
• third-party payments,
• schemes management and
• money remittance and scheme management.

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 once in place, will replace and repeal in their entirety:

• Directive for conduct within the national payment system in respect of payments to third persons – Directive No. 1 of 2007.
• 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.
• Position Paper on Electronic Money – Position Paper No. 1 of 2009.

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.

Written by Lerato Lamola, Partner at Webber Wentzel