RAPID PAYMENTS

PROGRAMME
The Future of Payments Systems in a
Post-Covid Digital World
06 October 2021

©Rapid Payments Programme All rights reserved

 Rapid Payments: An Overview

Agenda
For Today How Rapid Payments will play a role in our economy

How do we make Rapid Payments real for all South

Africans

2
©Rapid Payments Programme All rights reserved
 Rapid Payments:
An Overview

3
©Rapid Payments Programme All rights reserved
 Rapid Payments will:
Deepen digital financial enablement
via an accessible and inclusive
cashless
NOpayment option that is
viable for all

Drive interoperability between

participating and non participating
systems

Contribute to building a safe,

reliable and efficient National
Payment System that benefits the
whole of South Africa

4
©Rapid Payments Programme All rights reserved
4
RPP IS A FOUNDATIONAL BUILDING BLOCK
The Rapid Payments Programme (RPP) aims to strengthen the foundation of the National Payment System that is supported
by the architectural framework defined as part of the payments modernisation journey

SARB VISION 2025

Competition & Innovation
Financial Inclusion
Regional Integration
The South African Reserve Bank has
Transparent & Public Accountability Clear & Transparent Regulation
articulated its vision and goals for the
Cost Effectiveness Financial Stability & Security National Payment System (NPS) via the
Interoperability Flexibility & Adaptability
publication of Vision 2025

PROJECT FUTURE AND PAYMENTS MODERNISATION

The Payments Industry has defined an

Unified Payments
Platform Architecture
Enhancement of Future proof clearing architectural framework that aligns and
Introduction of Robust
Overlay Services
Instant and Bulk system and aligned to supports SARB’s Vision 2025
Payments HV and X-Border

RAPID PAYMENTS PLATFORM

The Rapid Payments Programme will
Instant Payment (Clearing) Proxy Service Request to Pay Service deliver the necessary foundation to
support Project Future and be the key
Financial Crime Risk Management Capabilities Active SLA Management Capabilities
first step for payments modernisation
API Enabled Rich Messaging (ISO 20022)

5
©Rapid Payments Programme All rights reserved
RAPID PAYMENTS FOR ALL SOUTH AFRICANS
Rapid Payments is designed with three core customer segments in mind – with further extensions into the formal market
(corporates)
Core Customer Segments Extensions

Underbanked Banked Small Merchants Corporates

Meet Ms. Sibiya
“I can send money to my
daughter using only her phone
number, even if she is not with
my bank. She will get the
money immediately”
Meet Mr. Abrahams
“Making payments has never
been so easy – it is just like
sending a text message”
Meet Mr. Khumalo
“When people buy from me, I
just send them a Request. They
pay immediately, it is quick and
cheap for me”
Meet Acme Co.
“It has become so much easier
to do most of our payments
digitally – it has saved us so
much time reconciling our
invoices”

The underbanked gains Customers enjoy Small merchants can transact Corporates will enjoy
greater access to mainstream interoperability between in a hassle free cashless improved efficiencies in
financial services payment rails method disbursements, payments and
business related transactions

6
©Rapid Payments Programme All rights reserved
PROVIDING A SIMPLER PAYMENT EXPERIENCE
It will provide South Africans the opportunity to make safe, reliable and efficient transactions everyday (as long as the
payer/payee has a store of value that is RPP enabled).

A Choose receiver B Action C Make payment D Confirmation

Mr. Khutsoane visits Ms.
Ndaba’s food stall for
some fresh vegetables.
He asks Ms. Ndaba if she
accepts Rapid Payments
– she does.
©Rapid Payments Programme All rights reserved
Mr. Khutsoane types Ms. Mr. Khutsoane checks the Mr. Khutsoane and Ms.
Ndaba’s mobile number payment details presented Ndaba instantly get a
into his Rapid Payments to him and confirms the confirmation of payment
app to pay Ms. Ndaba payment. and Mr. Khutsoane leaves
with his fresh vegetables.
7
RAPID PAYMENTS PRODUCT FEATURES
Rapid Payments is comprised of three parts that work together – Proxy, Request to Pay and Instant Payments

1 2 3

Proxy Request to Pay Instant Payments

Enable payments without the Enable users to request payment Immediate notifications and
need for bank account details from other users digitally posting of funds that are final
through proxy identifiers and irrevocable

Active SLA Management Capabilities

Financial Crime Risk Management Capabilities
API Enabled Rich Messaging (ISO 20022)
Underpinned by an accessible national payments platform
8
©Rapid Payments Programme All rights reserved
 How Rapid Payments will play a role in
our economy

9
©Rapid Payments Programme All rights reserved
A GLOBAL OVERVIEW OF G2P PAYMENTS
The use of digital tools for large scale government-to-person payments can be seen globally where real-time payment
systems were used to provide social grants and other government payments
Philippines: EGov Pay
• The Philippine Government has become the most digitised stakeholder
in its ecosystem, with 64% of all government transactions carried out
digitally
• The recently launched government platform, EGov Pay, enables
people to pay taxes and government offices online, with over 387
entities - enhancing payment collections

Thailand: PromptPay
• PromptPay was designed as a key service to support the National E-
payment master plan as part of the government’s Thailand 4.0 initiative
• The pandemic contributed to the huge leap in digital payments in the
country after the government paid out social relief aid to informal
workers during the pandemic through the instant payment system

India: Direct Benefit Transfer

• Direct Benefit Transfer was built on a platform that linked bank
accounts, ID and mobile numbers and was used to transfer benefits
electronically in an efficient and cost-effective manner
• Soon after, the Indian Government launched a biometric system where
welfare recipients could collect payments at collection points using the
biometric features
• This was key as it helped to prevent leakages and duplicate payments
Note: 1) Non-exhaustive of social welfare in the country
Source: Team analysis
10
©Rapid Payments Programme All rights reserved
SOUTH AFRICA’S INFORMAL ECONOMY
Township ecosystems within the informal economy are ever-growing, creating a hub of entrepreneurs that are creating
pockets of economic activity across different segments

Hole in the wall Spaza Shops Licensed Taverns and Shebeens

● Generates an estimated R157 billion a ● The tavern industry is estimated to be
year in revenue worth R60 billion and accounts for 80-
● 70,000 spaza shops and 30,000 90% of township alcohol sales
spazarettes and midi wholesalers ● It is estimated that there are 64,000
generating between R200,000 and licenced and between 180 000 and
R1 million per day 250,000 unlicensed outlets

Informal Food Takeaways The Muti Market

● Generates an estimated R90 billion a year ● The muti market is worth R3 billion a year,
in renvene with 27 million consumers
● The average vendor earns R3,000 a month
● The industry employs +20k vendors in this
sector
Note: 1) Non-exhaustive
Source: Alcock, GG. Kasinomic. 2018; DTI; Trade Intelligence
11
©Rapid Payments Programme All rights reserved
 GOVERNMENT PAYMENTS TYPES
Rapid Payments can be used to support the government in various other payment types, from social relief disbursement to
payment collection

Government-to-person G2P payments Person-to-government P2G payments G2P and P2G payments
Grant Disbursements
Water and Tax collections and
Sanitation Services refunds
Grants including
emergency grants Ability to pay water Tax refunds and
will be distributed and sanitation bills collections reflecting
without the need to instantly reducing instantly resulting in less
go to a branch or to reconciliation time reconciliation time
withdraw the cash and expenses

Unemployment Electricity
Benefits
Transport and Traffic Fines
Instantly provide Ability to purchase
short-term relief to electricity instantly Ability to pay for public
workers that are reduces expenses transport and settle traffic
unable to work or are and reduces fines in a quick and easy
unemployed reconciliation time way

12
©Rapid Payments Programme All rights reserved
Source: Team analysis
EXAMPLE OF GOVERNMENT PAYMENTS TYPES:
SASSA GRANT DISBURSEMENT FLOW
The diagram below provides a view of the payment flow for the monthly disbursement of “Normal” Social Relief (e.g. Pension, Child, etc.) and Social Relief of Distress (SRD) grants

Note: SARB plays the role of sponsoring bank to SASSA and arranges for availability of the facility. National Treasury funds the relevant provincial SASSA accounts held by the SARB

On Receipt of instruction:
 Basic file & data checks, along with
sorting of transactions according to
clearing destination. Banks utilize 2-day Clearing service.
 Exceptions identified could include Receive transactions 2 days before
incorrect account, branch codes, Grant Funds Utilisation
Settlement
failed CDV rules, etc.

Bulk Payment Payment Bureau (GovNet)

2 2
Instruction
Exceptions List
3 3
Adjusted Bulk
Cash
Payment 5 5 Bulk Credit Transfer
6
1 Prepare payment file per Instruction Instruction
SASSA provincial account
8 Exceptions List 8
EFT Service 7 Exceptions List
4 Correct exceptions and
9 resubmit payment file PAYMENT SYSTEM
Card / Digital
Updated OPERATOR Bulk Credit Credit to Transactions
Payment Details Transfer Instruction Beneficiary
account
On Payment Action date, Settlement Unpaid transactions are
instruction is sent to SAMOS. sent to SASSA within 4
Settlement is processed on same business days
day.

“Normal” Social Relief Grants

 An average of 12.4 million social relief grants are processed monthly
 80-85% of the transactions are disbursed through the South African Post Bank. Majority of these disbursements are fully withdrawn via ATM.
 The 2-day clearing service assists greatly with reducing the number of incorrect / invalid disbursements. Measures are applied in the process to ensure that all transaction validations, and
related clearing procedures, are completed in time to provide value in the beneficiary’s account on the expected payment date.

Social Relief of Distress (SRD)

 The SRD disbursement flow is the same as the “normal” grant payment flow.
 On average, 3.8 million SRD grants are processed monthly, with 10 million transactions processed at peak. These payments are usually made on an ad-hoc basis (as mandated by Government)
©Rapid Payments Programme All rights reserved
 How do we make Rapid Payments real
for all South Africans

14
©Rapid Payments Programme All rights reserved
 PARTNERING WITH BANKS
The benefits of Rapid Payments can be realised through collaboration with
financial institutions

Financial institutions will offer customers a low cost

alternative to cash based options, promoting
financial inclusion and reducing the demand for
Offering banked cash

and underbanked
customers a new Reduced cash demand will enable disinvestment
in cash based channels and mitigate the ~R500
suite of payment million in losses from cash related crimes

options
Financial institutions will provide access to the 80%
of South Africans with bank accounts and promote
greater use of bank accounts by the underbanked
Source: Payment Association of South Africa – A Case for Change for SA, Team Analysis

15
©Rapid Payments Programme All rights reserved
 PARTNERING WITH GOVERNMENT
The benefits of Rapid Payments can be realised through collaboration with
government

Reduced tax leakages from tax evasion can

generate a potential ~R52.5 billion in tax revenue
over 5 years by switching transactions to digital
Enhancing payments

government
Reduced overall cost of cash with ~R88 billion in
efficiencies savings generated for consumers, businesses and
the Central Bank by reducing direct and indirect
costs of cash

Enhanced service delivery with safe and

convenient grant payments and small business
development aid
Source: Payment Association of South Africa – A Case for Change for SA, Team Analysis

16
©Rapid Payments Programme All rights reserved
 PARTNERING WITH NON-BANKS
The benefits of Rapid Payments can be realised through collaboration with
non-banks

Individuals make ~1.5k payments annually, SMMEs

will enable the conversion of these predominantly
cash purchases to digital payments
Leveraging non-
bank entities to
Retailers and merchants will raise public
extend our reach to awareness by promoting the use of digital
underserved payment services instore and online

customers
Network operators will drive access and
enablement across the existing footprint of 64
million active mobile cellular subscribers¹
Note: 1) Active mobile cellular subscribers - the number of SIMs that have not been disconnected within a 90-day window
Source: ICASA Industry Sector Report 2021, WHO, Nielsen, Finmark Trust, StatsSA, DDT, Insight Survey, Team Analysis

17
©Rapid Payments Programme All rights reserved
 Thank
You
“It always seems impossible, until it’s done”
- Nelson Mandela

za_rpp@pwc.com

©Rapid Payments Programme All rights reserved