01 Research Paper

Introduction to Africa

Africa is the largest unserved market that has dropped out of sight of the global financial system. While it is
true that around 94% of all retail payment transactions (urban and rural) across Africa are still conducted in
cash, central banks are now focusing on driving down the usage of cash and promoting electronic channels
and mechanisms such as card, mobile, POS and ATM.

Based on several reports and estimates, approximately 330 million adult Africans are lacking access to formal
financial services, and this entails significant opportunities for financial technology companies like
ECommPay.

According to the world Economic Forum, Africa has enjoyed an enviable streak of strong economic growth.
For the past 16 years, the region has maintained an average GDP growth rate of 5%, which has outperformed
the global average by approximately two hundred basis points per annum.

The McKinsey report published in February 2018 advocates that 40 percent of the African banking surveyed
customers prefer to use digital channels for transactions, roughly the same share as those who prefer
branches.

There are segments in the financial services industry that are particularly advanced in terms of adoption scale
and of attractiveness to entrants. Remittance via mobile has picked up a rapid pace in Africa, with Kenyans
having used mobile money services for over eight years - M-Pesa being Kenya’s dominant mobile money
provider has extended their offerings to allow users to make P2P payments by simply texting.

The Central Bank of Nigeria (CBN) had introduced a policy in 2012 on cash-based transactions which
stipulates that cash handling will be charged a fee on daily cash withdrawals exceeding a certain amount for
both individuals and Corporate bodies. Therefore, Nigeria has recorded a significant growth in electronic
payment transactions since the inception of the “cash light policy”. The cash policy aims not only to curb
some of the negative consequences associated with the high usage of physical cash in the economy, but also
to sustain the government’s vision of being amongst the top 20 economies by the year 2020 in modernising
its payment system and driving financial inclusion

The Republic of South Sudan who became in July 2011, after referendum the 55th African country, is
according to the World Bank facing hyper-inflation, with an overall inflation of 125 % and food inflation at
112 % per annum as at January 2018. This is an opportunity for disruptors and fintech companies envisaging
to empower the populations by providing alternative methods of payments and alleviating the burden of
carrying large amount of bills.

The payments landscape in Tanzania is only 2.5 bank branches and 6.4 ATMs per 100,000 adults. As such,
Tanzania is still largely a cash-based economy. KPMG reports that Tanzanians are increasingly adopting
mobile money alternatives, with 43% of the adult population as active users. This is a staggering adoption
rate for less than a decade since Vodacom first launched their M-Pesa platform.

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The volume of cashless transactions in Africa grew by 13 percent per annum between 2014 and
2016, driven by the improved availability, reliability, and security of electronic channels. These
opportunities do make Africa the world’s second-fastest-growing payments market after Asia-Pacific
and the second-highest revenue per cashless transaction

Source: Roaring to life: Growth and innovation in African retail banking, McKinsey Report, February 2018

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Introduction to South Africa

South Africa is home to 57.4 million (est. UN) people with a total GDP of 294.84 billion USD and is ranked as
the 30th richest country, according to the World Bank ranking. South Africa's GDP is currently US$ 6,180 per
capita

South Africa is one of the largest B2C E-Commerce markets in Africa and among the regional leaders in
Internet and mobile phone penetration. There are currently 18.43 million e-commerce users in South Africa,
with an additional 6.36 million users expected to be shopping online by 2021. Four years from now, the total
population of e-commerce users will be 24.79 million and the average online spending is expected to amount
US$ 189.47 per user.

Snapshot of South Africa

Population 57.4 million (est. UN)

Official Languages (11) Afrikaans, English, Ndebele, Northern Sotho, Sotho, Swazi, Tsonga, Tswana,
Venda, Xhosa and Zulu

GDP per Capita US$ 6,180

Number of commercial 24
banks

Bank Branches per 10.5

100,000 adults

VAT incl. E-Commerce 15 % as at 1st April 2018

Current E-Commerce 18.43 million and projected increase of 34.5% (24.8 million) over the coming
users years

Regulator (Non- Financial Services Conduct Authority (FSCA)

banking Institutions)

Reguator for PSP PASA

Emerging Sectors Finance, Real Estate, Business Services

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  Electronics & Media estimated at US$ 964 million and expected to grow to US$
1.38 billion by 2021
Main Retail Segments  Furniture & Appliances estimated at US$ 553.7 million and projected to rise to
by Online Shoppers US$ 1.07 billion by 2021

Fast Facts

According to the report published in 2017 on export.gov, mobile spend is projected to increase by 123%
in 2018
25% of shoppers in South Africa use their mobile phone for online purchasing, accounting for 15% of
ecommerce, a total transaction value of approximately US$ 50 million.
While phone apps and music downloads remain the most popular purchases, it is estimated that 51% of
South African have used their smartphones to book their holidays.
Based on the analysis from PayFast, one of leading payment gateway, the average basket size is ZAR 725
/ US $ 55 per order and 70 % are paid by credit cards.
International online-sales days such as Black Friday and Cyber Monday are popular in South Africa as well
as seasonal shopping during the festive period, i.e Christmas
Gambling in South Africa is regulated by the National Gambling Act 7 of 2004
The Independent Communications Authority of South Africa (ICASA) is responsible for regulating the E-
commerce sector in South Africa under the Electronic Transactions Act.
The Johannesburg Stock Exchange (JSE) is ranked 16th worldwide in terms of "largest market
capitalisation" and 19th in terms of largest gains. (Economist)
According to a study conducted by Ipsos on behalf of PayPal and First National Bank, 71 % of current
online shoppers are rebuffed by the fact that payment and delivery details are requested for each
transaction.
PayPal is gaining more traction in South Africa with over 1 million of PayPal accounts opened.

Market Profile

2C E-commerce Market Size 3,131million USD (2018 est.) source: https://www.statista.com

Leading Payment Providers IVeri, MyGate (only payment gateway), Setcom (acquired by
MyGate), SID (launched by Setcom), Pay4It, PayFast, PayU, Peach
Payments, 2CheckOut

Popular Online Payment Methods International credit cards (MasterCard, Visa, American Express),
Loyalty Cards, PayPal, MasterPass, internet banking links (Smart EFT,
Bank Debit Order)

Number of Payment Providers > 80 as per PASA

Based on the different articles published by experts in both the banking and E-Commerce space, it is denoted
that although South Africa is the most significant e-commerce contributors on the African continent, their

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total online market represents only 1% of total retailed goods, while European countries have crossed the
20% mark.

It is expected that the next level e-commerce adoption, shall witness a paradigm shift in purchasing behaviour
to favour the convenience of online platforms and will amount to a net increase of 40 %.
Rules & Regulations governing Payment System Operators

Payment Association of South Africa (“PASA”) authorises “system operators” in terms of the South African
Reserve Bank(SARB) directives and acts as the management body of the National Payment System(NPS) that
sets out the conditions under which such companies may participate in the payment system. System
operators /payment processors/payment service providers/payment gateways have to comply to the criteria
as set out in the directive, including important security standards such as PCI DSS. Furthermore, due to the
growth of credit card fraud, the PASA mandated the use of 3D Secure in 2014.

System Operators (SOs)

Parties who are not banks or designated clearing system participants that engage, as part of their normal
business, in providing services to two or more persons in respect of payment instructions, including the
delivery to and/or receipt of payment instructions from the bank and/or a PCH SO must comply with
provisions of Directive No. 2 of 2007 for Conduct within the National Payment System in respect of System
Operators, published under General Notice 1111 in Government Gazette 30261 on 6 September 2007.

Registered non-bank Third Party Payment Providers (TPPPs)

Directive No.1 of 2007 for Conduct within the NPS in respect of payments to third parties was published
under General Notice 1110 in Government Gazette 30261 on 6 September 2007

In which ways can payments to third parties be undertaken?

.1 Money or the proceeds of payment instructions are accepted by a person (a beneficiary service
provider), as a regular feature of that person’s business, from multiple payers on behalf of a
beneficiary. An example will be the acceptance of money or proceeds of payment instructions by a
retailer or other outlets for payment of utility bills.
.2 Money or the proceeds of payment instructions are accepted by a person (a payer service provider),
as a regular feature of that persons business, from a payer to make a payment on behalf of that
payer to multiple beneficiaries (payment of salaries on behalf of employers to their employees).

Based on the article published by PASA, only half of the non-bank providers of payment services are card-
enabled and even fewer are e-commerce card-enabled. In other words, the rest do physical card processing
or operate as bureaus for the processing of debit orders or provide a combination of services.

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 Recently Jonathan Smit, managing director of PayFast, advocated on the reputed website IOL, the
independent online news broadcaster and leading publisher of printed material in South Africa that “there
are only about 10 noteworthy payment service providers in South Africa“.

Leading Payment Service Providers

iVeri South Africa's largest provider of technology for virtual and mobile commerce (PCI DSS compliant
and EMV approved), supports multiple-channel card acceptance and offers MicroBank+ for a
turnkey agency/branchless banking solution.
MyGate Member of the Wirecard Group (one of the world’s leading international financial services and
technology companies) serving merchants throughout Africa, such as DSTV, Naspers,
HomeChoice, etc. Processing methods provided include online MOTO, recurring payments and
debit orders. MyGate had acquired Setcom, another leading PSP in South Africa. Requires
merchant account. (Integrated with Barclays)
Pay4It A subsidiary of REDInternet Services, Pay4It is a one-stop-shop for all ecommerce requirements
that offers a full portfolio of web design and development services in addition to its payment
gateway service. Pay4It charges ZAR 750 +VAT once-off setup fee, ZAR 250 monthly subscription
fee, and levied 6% per each transaction.
PayFast A payment processing service for South Africans; the payments are kept in the seller's PayFast
account. When the seller requests a pay-out, the money is transferred to their bank account.
PayFast processes MasterCard and Visa credit cards, Instant EFT, credit facility by mobicred and
Bitcoin.
PayU One of the largest payment providers worldwide, offers a variety of options for businesses and
the largest number of payment methods of any gateway in South Africa. PayU is also available in
16 countries and has a robust enterprise ready system for transaction queues for businesses
requiring large number of transactions at a time. The PayU Wallet allows consumers to pay from
their wallet and not require typing in credit card details upon checkout.
Peach Peach Payments provides payment solutions to online and mobile businesses enabling them to
Payments easily accept payments from consumers in Africa. The company’s payments solution enables
merchants to accept payments across all their channels including their website, mobile website
and their mobile apps (iOS, Android etc.).
2CheckOut offers a payment gateway service with no waiting period and no term contracts. It supports
recurring billing and will work with existing shopping carts. A signup fee of $49USD is levied by
2CheckOut with a 5.5% commission on each transaction, along with a $0.45USD charge per
transaction. With no monthly gateway or statement fees, 2CheckOut also makes it possible for
customers to purchase products with PayPal aacounts.

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 Payment Gateways

Paygate Requires a merchant account with ABSA, First National Bank, Standard Bank or NedBank
Fees: No Setup fee. Minimum monthly fee of ZAR 185.00 and ZAR1.00 per transaction.

iVeri Netbank’s payment gateway.

Fees: Unknown
VCS Virtual For ABSA or FNB customer
Card Fees: Authorizations is ZAR 1 while transaction is + 0.5% of the value of each transaction.
Services Monthly Minimum fees of ZAR 145
Sage No merchant account required. – Payment will be processed via their merchant account.
Netcash Fees: R 1.00 per transaction and (4.5% to 5%) commission based on transaction values.

SetCom / No merchant account is required.

MonsterPay Downside is that every user is required to log into SetCom site to make payment
ZAR 250 of setup fees and ZAR 250 monthly fee coupled with 0.65% charged per transaction
PayFast No Merchant account required
Integrated with Shopify
Fees: For Instant EFT, 2.0% of the transfer is charged while 4.9% for credit card transactions.
Paypal PayPal does not accept South African merchants, transfer of funds in South African bank
account is not possible
2Checkout Funds can be transferred to South African accounts, but merchant must create a catalogue of
products in their system.

Charges with South African payment gateway will be processed in South African Rands except for PayPal and
2Checkout.

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Listing of PASA Members

System Operators or Third-Party Payment Providers are not PASA members, but are either authorised by or
registered with PASA.

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 Listing of System Operators (SOs)

Card
Institution Name Payment Streams Association
AEDO, NAEDO, Cheque, EFT Credit,
1 ALL ENCOMPASSING SWITCHING PTY(LTD) EFT Debit, RTC N/A
Altech Card Solutions a division of Altron TMT Credit Card, Debit Card, EFT Credit,
2 (Pty) Ltd Other None
Altech NuPay, a division of Altron TMT (Pty)
3 Ltd AEDO, NAEDO, EFT Credit, EFT Debit N/A
ATM Solutions a division of Paycorp Group
4 (Pty)Ltd ATM, Credit Card, Debit Card Visa

5 Bridge Collections (Pty) Ltd NAEDO N/A

Mastercard &
6 Business Connexion (Pty) Ltd Credit Card, Debit Card, Other Visa

7 Capital Computer Bureau (Pty) Ltd NAEDO, EFT Credit, EFT Debit N/A

8 Capital Software Solutions Pty Ltd AEDO, NAEDO, EFT Credit, EFT Debit N/A

9 Club Leisure Development (Pty) Ltd NAEDO N/A

10 CollectNet Pty Ltd EFT Credit N/A

11 COMIT TECHNOLOGIES NAEDO, EFT Debit N/A

12 CRISIS QUANT DEBIT SERVICES (PTY) LTD EFT Credit, EFT Debit N/A
ATM, NAEDO, Credit Card, Debit MasterCard and
13 Direct Transact (Pty) Ltd Card, EFT Credit, EFT Debit Visa

14 DMC Debt Management (Pty) Ltd NAEDO, EFT Credit, EFT Debit, Other N/A

15 EASY DEBIT PAYMENT SOLUTIONS (PTY) LTD AEDO, NAEDO N/A

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 Mastercard,
Visa, Amex
16 EasyPay (Pty) Limited Credit Card, Debit Card Diners
ATM, Credit Card, Debit Card, EFT
17 Ecentric Payment Systems (Pty) Ltd Credit, EFT Debit, Other None

18 EFTPOS, a division of Paycorp Group (Pty) Ltd EFT Credit N/A

Visa,
MasterCard,
Amex, Diners &
19 Enterprise Electronic Commerce SA (Pty) LTD Credit Card, Debit Card China Union Pay

20 Envision Risk (Pty) Ltd NAEDO, EFT Debit N/A

21 eTranzact Global South Africa Other N/A

22 EXXARO RESOURCES LIMITED EFT Debit N/A

23 FIDELITY SECURITY (PTY) LTD Other N/A

NAEDO, EFT Credit, EFT Debit, RTC,
24 Fintec Labs (Pty) Ltd Other N/A

25 FNDS3000 (PTY) LTD Debit Card N/A

26 G4S Cash Solutions (SA) (Pty) Ltd Other N/A

27 G4S Deposita Systems ATM N/A

NAEDO, Credit Card, EFT Credit, EFT
28 HYPHEN Technology (Pty) Limited Debit, RTC None

29 i-Pay Secure Payment Proprietary Limited EFT Credit N/A

30 IMB Financial Services PTY Ltd EFT Credit, EFT Debit N/A

31 Incatorque (Pty) Ltd EFT Credit N/A

VISA and
MasterCard
ATM, AEDO, NAEDO, EFT Credit, EFT Third Party
32 Information Technology Consultants (Pty) Ltd Debit Agent

33 Innervation Value Added Services (PTY) Ltd Credit Card, Debit Card None

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34 Integrated Processing Solutions (Pty) ltd IPS Cheque, EFT Credit N/A

35 Internet Filing Trading as Interfile Pty Ltd EFT Credit, EFT Debit N/A

36 Kianga Trading (Pty) Ltd NAEDO, EFT Credit, EFT Debit N/A

37 Mercantile Payment Solutions Pty Ltd NAEDO, EFT Credit, EFT Debit, Other N/A

38 MMI Health (Pty) Ltd EFT Credit, EFT Debit N/A

39 Mobipaid Pty Ltd Credit Card, Debit Card Mastercard

Mastercard,
Visa, Amex,
40 MyGate Communications Credit Card, EFT Credit, EFT Debit Diners
Net1 FIHRST Holdings (Pty) Ltd t/a FIHRST
41 Management Services EFT Credit, EFT Debit N/A

42 netUP Bureaux N/A

43 Nevex Technologies ATM, EFT Credit Mastercard

Visa,
MasterCard,
44 Nomad Information System Credit Card, Debit Card, Other Amex, Diners

45 NuDebt Management (Pty) Ltd NAEDO, EFT Debit N/A

46 O'KEEFFE AND SWARTZ BPO (Pty) Ltd AEDO, NAEDO, EFT Credit, EFT Debit N/A

47 Oltio (Pty) ltd Cheque, Credit Card, Debit Card Mastercard

ATM, AEDO, NAEDO, Credit Card,
Debit Card, EFT Credit, EFT Debit, Visa,
48 Olympus Mobile (Proprietary) Limited RTC MasterCard

49 Pay At Services (Pty) Limited EFT Credit, EFT Debit, Other N/A

50 Payaccsys Services (Pty) Ltd NAEDO, EFT Credit, EFT Debit N/A

51 Paycorp Group (PTY) Ltd ATM N/A

Visa and
52 PayGate (Pty) Ltd Credit Card MasterCard

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 NAEDO, Credit Card, EFT Credit, EFT
53 Paym8 (Pty) Ltd Debit N/A
Mastercard and
54 Payon (Pty) Limited t/a PAYLINE Credit Card, Debit Card Visa

55 Paysoft (Pty) Limited NAEDO, EFT Credit, EFT Debit N/A

Credit Card, Debit Card, EFT Credit,
56 PayU Payment Solutions (Pty) Ltd EFT Debit Mastercard

57 Peach Payment Services (Pty) Ltd. Credit Card, Debit Card None

58 PEXSA Bureaux, Other N/A

59 Platinum Life NAEDO, EFT Debit N/A

60 PRODUCT CREDIT SOLUTIONS (PTY) LTD NAEDO, EFT Credit, EFT Debit N/A

61 Profile Corporate Services (Pty) Ltd EFT Credit, EFT Debit N/A

62 Q LINK Holdings (Pty) Ltd NAEDO, EFT Debit N/A

63 Real Pay Payment Solutions Pty Ltd NAEDO, EFT Credit, EFT Debit N/A

64 Retriever Fintech (Pty) Ltd NAEDO, EFT Credit, EFT Debit N/A
NAEDO, Credit Card, EFT Credit, EFT
65 Sage Pay (Pty) Ltd Debit Mastercard

66 Sanlam Life Insurance Limited t/a Multi-Data NAEDO, EFT Credit, EFT Debit, RTC N/A

67 SBV Services (Pty) Ltd EFT Credit N/A

68 Setcom (Pty) Ltd Credit Card, EFT Credit None

69 SmartPurse Solutions (Pty) Ltd Debit Card N/A

70 Softy Comp NAEDO, EFT Credit, EFT Debit N/A

71 South African Bankers Services Cheque, Other None

72 South African Payment Exchange (Pty) LTD NAEDO, EFT Credit, EFT Debit N/A

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73 Spark ATM Systems (PTY) LTD ATM N/A
NAEDO, Credit Card, EFT Credit, EFT
74 StratCol Limited Debit Mastercard

75 Sureswipe Credit Card, Debit Card Mastercard

76 SureSystems (Pty) Ltd AEDO, NAEDO N/A

77 The One sp (Pty) Ltd EFT Credit, RTC, Other N/A

78 Three Peaks Management (Pty) Ltd EFT Credit, EFT Debit N/A

79 Transaction Capital Payment Solutions NAEDO, EFT Credit, EFT Debit N/A

80 Transaction Junction (Pty) Ltd ATM, Credit Card, Debit Card None

81 Trustlink Bureaux N/A

82 Tutuka Software (Pty) Ltd Debit Card, Other N/A

83 Waxed Mobile Payments (Pty) Ltd EFT Credit N/A

84 Wirecard South Africa (Pty) Ltd Credit Card, Debit Card, Other N/A

Source : PASA website

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The legal framework regulating online payment service providers in South Africa is depicted below.

South African
Reserve Bank
Act

National
Payments
System Act

Payment Association of South Africa

(PASA) Constitution

PASA Policies
and Position
Papers

Payment
Clearing
House (PCH)
Agreements

PCH Clearing
Rules

Service Level
Agreements

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Current Regulatory Framework
1. South African Reserve Bank Act, No. 90 of 1989
› Mandates the Central Bank to create enabling
legal framework & policy in respect of
payments.
› Regulates minimum reserve balances to be
maintained by banks.
2. National Payments System Act, No. 78 of 1998
› The NPS Act provide for the management,
administration, operation, regulation and
supervision of payment, clearing and
settlement systems in the Republic of South
Africa; and to provide for connected matters.
› The NPS Act recognised the Payments
Association of South Africa (PASA) as a
Payment System Management Body (PSMB).
3. PASA Policies and Position Papers
› PASA’s constitution governs its functions,
structures and activities, with further rules
affecting its members in the form of PASA
policies and position papers.
4. Payment Clearing House (PCH) Agreements
› The specific transaction types and applicable
clearing rules relevant to each PCH are
agreed amongst members forming part of a
participant group.
› The PCH Participant Group (PCH PG) would
also be responsible for the appointment of
one or more PCH Systems Operators (PSO)
for each PCH, which would be authorised by
PASA to clear interbank payment instructions.
Source: Payment Developments in Africa by KPMG, 2015, Section 3, sub-section: Current Legal Framework
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5. Service Level Agreements (SLA)
› The participation of members and the PSO is
further managed through adherence to Service
Level Agreements (SLA). Transactions cleared
through the PSO are eventually settled at the
SARB through SAMOS.
6. Other key policies, laws and regulations for
payments:
› Banks Act, No. 94 of 1990 that governs
the issuing of banking licenses to banking
institutions and monitoring their activities.
› E-money position paper by the SARB, Position
Paper NPS 01/2009.
› Exchange Control Regulations promulgated
in 1961 and the Exchange Control Rulings
with amendments as advised by way of
Circulars issued from time to time, that govern
transactions in foreign currency, executed
domestically or cross-border.
› Competition Act, No. 89 of 1998 to control and
evaluate fair competition in South Africa
› Protection of Personal Information (POPI)
Act which regulate the processing and
protection of personal Information.
› The Financial Intelligence Centre Act (FICA),
No. 38 of 2001 introduced to fight financial
crime, such as money laundering, tax evasion,
and terrorist financing activities.
› Electronic Communications and Transactions
(ECT) Act of 2002 that regulates electronic
communications and transactions.
 Online Betting in South Africa

While Africa is still touted as a poor continent where up to 40 percent of people live below the poverty line,
the continent is also fast emerging as one of the most promising and lucrative markets for sports betting.

In the 2014 Gambling Outlook Report released by PWC, the combined size of the betting market in Kenya,
Nigeria and South Africa is projected to be worth nearly US$37 billion by end of 2018. Horse racing and
sports betting and various lotteries including the National Lottery are permissible and legal.

The major Sports Betting Businesses operating over Africa are:

SportPesa The biggest sport betting business in East Africa, with a very strong presence in Kenya and over 1
million registered users. This business, which only started operations in 2014, now sponsors a long
list of sporting events across the region, including the Kenya Premier league to a tune of US $3.5
million. Reports estimate Sport Pesa’s revenues to be over US $40 million. Sport Pesa enjoys
partnerships with leading banks, telcos, radio stations and media houses in Kenya. This has helped
to strengthen its lead in the sports betting market in East Africa
Supabets
Based in South Africa, Supabets is rapidly expanding across sub-Saharan Africa. It now has
businesses in Nigeria, Ghana, Zambia, Zimbabwe, Kenya, Tanzania and the Democratic Republic
of Congo with floor payouts of up to 1.5 million ZAR (roughly $100,000), Supabets is one of the
leading businesses in the highly competitive sports betting market in South Africa. Payment
Providers are ipay, FNB, ABSA, Standard Bank, Skrill

Bet9ja A home-grown sport betting business in Nigeria that’s doing its best to overcome the intense
competition in the market. It is not the market leader in Nigeria but its highly visible promotional
campaigns make it one of the most promising businesses to watch on the sports betting scene.

Gambling in South Africa

Unsurprisingly, South Africa is one of the leading lights in Africa in terms of gambling legislation, types of
gambling on offer, and number of casinos and betting outlets. The report by PWC also stated that in South
Africa, the sector brought revenues of ZAR 23.9-billion, an amount that is predicted to rise up to ZAR
30.3billion in 2019.

But, while land casino gambling, sports and horse race betting, limited pay-out machines and bingo is 100%
legal in South Africa, online gambling is illegal for server locations located in South Africa. Subsequently there
are no South African-based online casino, poker or bingo sites.

Despite the National Gambling Amendment Act of 2008 that was authored with the aim of legalising and
regulating interactive gambling in South Africa, it has never passed and signed into law. Moreover,
subsequent laws underpinned the government position to ascertain that online gambling is illegal within
South Africa's borders and the PWC report further states the government has no plan to legalising this activity
onshore.

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The result is that South Africans who choose to gamble online can only do so at offshore-operated and owned
online gambling sites, which is considered to be unlawful under South Africa's current gambling laws (Chapter
2, Part B of the National Gambling Act 7 of 2004). Also, in terms of the proposed legislation, software
vendors who build interactive gambling platforms will have to be licensed.

Forex Trading

The official regulatory body is South Africa’s Financial Services Board (FSB), which is the financial regulatory
agency assigned to overseeing the non-banking financial sector in the country.

The South African government has no regulations regarding the legality or illegality of Forex Trading
platforms, but only a system of exchange control that oversees the cash outflow from the country. This
system is overseen by the South African Reserve Bank (SARB) and is conducted through the banks and
financial institutions.

Nevertheless, the FSB has substantial powers and is able to impose unlimited fines and penalties on any
FSB regulated brokers if found to be breaking the rules.

South Africa Forex Brokers (Non-exhaustive listing)

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Major online businesses in South Africa, along with their corresponding acquirer:

Shop Market Share Payment Gateway

Takealot 12.5% API

Apple App Store 5.5% PAYU
Pick n Pay 5.1% PAYU
Woolworths 2.7% API
Sportsman Warehouse 2.2% API
Incredible Connection 2.0% PAYU
Exclusive Books 1.8% API
Home Choice 1.6% Local Banks
Amazon 1.5% API
Mr Price 1.5% API

Major Hotels in South Africa Acquirer

Southern Sun Waterfront
Southern Sun Elangeni
Garden Court Sandton City
Garden Court South Beach NedBank Ltd
Southern Sun The Cullinan
Southern Sun Cape Sun
Southern Sun OR Tambo International Airport
Westin Grand Cape Town Arabella Quays
Birchwood Executive Hotel API
Sun City Cabanas No online payment gateway

Based on our research, the subsequent acquiring banks that are playing an increasingly hands-off role and
helping third-party independent sales organizations (ISO) in Africa regarding the opening and operating of
merchant accounts are:

Nedbank Investec
Standard Bank ABSA
Capitec FNB

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COUNTRIES ABSA Nedbank Standard Bank FNB Bank Investec
Nigeria ✔ ✔

Ghana ✔ ✔

Namibia ✔ ✔ ✔

Botswana ✔ ✔ ✔ ✔

South Africa ✔ ✔ ✔ ✔

Mozambique ✔ ✔ ✔

Zambia ✔ ✔ ✔

Tanzania ✔ ✔ ✔

Uganda ✔ ✔

Kenya ✔ ✔

Mauritius ✔ ✔ ✔

Seychelles ✔

Zimbabwe ✔ ✔

Lesotho ✔ ✔

Malawi ✔

Egypt ✔

Cameroon ✔

Angola ✔

Cote D’ Ivoire ✔

Gambia ✔

Swaziland ✔

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Objectives of the Mission & Strategic Goals

After having crafted and completed the fact gathering exercise to form an evidence-based assessment, we
have come up with a guiding light that shall enable the participants of the exploratory mission to successfully
gauge the South African Payment ecosystem and ultimately, enabling ECommpay to operate in that part of
the region.

An overview of the E-Commerce ecosystem, with the objective of identifying and forecasting the
potential of the overall market and especially with respect to the Gaming, Betting and Forex providers
An analysis of the needs and demand of the targeted markets
Understanding the licences that might be required to successfully partnering with South African-based
merchants in various sectors of activity
Exploring avenues of collaboration with banks and other financial institutions for the provision of
acquiring services
Strategic recommendations to ECommpay HQ; targeted segments or niches where HQ might bring
forward an added value offering
Exploring the potential of being licensed as a direct acquirer for Visa/Mastercard for the African
continent
The possibility of acquiring local PSP to continue expanding ECommpay’s footprint.
To support these objectives by creating a storehouse of useful economic and financial data.
Drafting a roadmap for penetrating the market

Listing of Stakeholders’ meetings

i. Representation Office of the Mauritius Economic Development Board in South Africa

ii. Payment Association of South Africa (PASA)
iii. ABSA
iv. FNB South Africa
v. Nedbank
vi. Standard Bank
vii. Johannesburg Chamber of commerce
viii. Association of System Operators (ASO)
ix. Ecommerce Forum South Africa
x. Deloitte South Africa
xi. Invest SA (South African Department of Trade and Industry)
xii. Representative office of Intercontinental Trust in South Africa, Willem Du Preez
xiii. Werksmans Attorneys, Jeane Meiring

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References
This section contains supplementary material that is not an essential part of the text itself, but which may
be helpful in providing a more comprehensive understanding of the research.

1. Demographics and Trend

2. South Africa Investment Potential, PWC
3. South Africa Economic Snapshot H2, 2017, KPMG
4. E-Commerce in South Africa
5. National report on e-commerce development in South Africa
6. E-Commerce, Legislations & Initiatives by South African government
7. Online betting trends in Africa
8. Online gambling legislation in South Africa
9. Legal South African Forex Brokers and Trading Platforms 2018
10. A Guide to South African Payment Gateways
11. Payment Developments in Africa 2015 by KPMG
12. SARB Regulations
13. Directives for PSP by SARB - NPS Act
14. Leading Payment Service Provider
15. Steps to becoming a third-party payment service provider (PSP)
16. Members of PASA
17. National Gambling Amendment Bill 2016
18. National Payment Systems Act 78 of 1998
19. South Africa Reserve Bank Act 90 of 1989
20. South Africa Trading Investment Policy
21. Criteria for authorisation to act as system operator
22. PASA Annual Report 2016

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