SA’s payment system has achieved great things but innovation is constrained due to a huge gap in the market, according to a partner at Genesis Analytics, Richard Ketley.
Speaking at the South African Reserve Bank’s Payments Innovation Conference in Joburg in early October, the managing partner of their Financial Services Strategy practice said that the Payments Association of South Africa ensures the efficient negotiation of product rules and implementation of new products, while Bankserve, the national switch can implement network products and ensure local processing and pricing, and virtually all products are fully inter-operable.
“The efficiency of the payments system is reflected in the very high level of banking penetration with 77% of the population have at least some sort of bank account and card. Government has played its part by ensuring that SASSA cards are inter-operable payment cards and welfare recipients can benefit from the widespread payments infrastructure' said Ketley.
“But innovation is constrained: Both MNO’s (mobile network operators) have withdrawn from trying to offer low-cost mobile money accounts that have been so successful in other markets,’ said Ketley.
He also said there has been limited success in the roll out of lower cost alternatives to conventional point of sale devices, the cross-border money transfer environment is tightly regulated and no roadmap has been laid out for low-cost instant EFT.
“There remains a huge gap in the market between actual customer behaviour and innovation that assumes customer comfort with transacting via a smartphone app.”
Ketley said that going forward the challenge will be to create a regulatory environment which is more conducive to innovation while recognising the enormous changes required of the regulators who were principally established to ensure solid liquidity and credit risk management in banks.