PayShap Explained – What is it and how does it work
The South African Reserve Bank (SARB), partnered with clearing house BankservAfrica, has announced that on Monday 13 March 2023, it will launch a new rapid payment programme called PayShap.
What exactly is PayShap?
PayShap will allow people to make instant transfers of money through their phones and without the need of a bank account. To do this, senders will use vouchers and unique PIN codes. The recipients can then perform another transaction without the need to cash out the money they received. They can instantly make payments from their new balance to various people.
How is PayShap different (or better than) cash or a bank account?
It will allow individuals to make instant payments and transfers between various banks, save money in their wallets, and make payments without the need for excessive banking fees. It is a push payment system rather than a debit-pull, meaning that the control remains with the recipient of the payment and that the payment will be directly processed by BankservAfrica (rather than Mastercard or Visa).
PayShap has been designed to clear faster than current account-based schemes and hopes to be a quick and convenient way to get low-cost cash in less than 10 seconds.
The payments through PayShap will also allow for smaller transactions and will be cheaper than transactions people face through regular banking apps. PayShap also hopes to expand its footprint and soon be available on other apps such as WhatsApp.
PayShap is the country’s first instant interbank digital payment service that will offer banking for low-value payments. It is similar to Electronic Funds Transfer (EFT) and Real-Time Clearing (RTC), and will be different from regular card payment systems.
What inspired the idea for PayShap?
In 2020, a similar payment system, called Pix, was launched by a central bank in Brazil. To date, more than two-thirds of adults in the country are using the Pix app.
Inspired by this, PayShap was created by BankservAfrica (an automated learning house owned by South African banks).
During this initial launch period, PayShap wallets will only be offered by South Africa’s “big four” banks (Standard Bank, First National Bank (FNB), Absa, and Nedbank), with others joining the system at a later stage.
When will PayShap be available for South Africans to use?
PayShap will be divided into two stages.
Stage 1: PayShap will be launched as an instant interbank clearing feature and thus, allow people to make payments into their bank accounts or cellphone numbers.
Stage 2: This stage will create a request-to-pay function that will allow people to request payments and instantly receive it to their bank accounts.
This PayShap service is currently being tested and will partake in a soft launch with four main pilots in March 2023. It will then continue throughout the year.
How much does PayShap cost?
Each bank will announce their pricing structure for the PayShap app soon after its initial launch (but it is expected to be a lot more affordable than immediate bank payments).
At first, Absa charged users R60 for immediate interbank transfers and then reduced it to R10 in 2021. However, it still charges R49 to users for immediate transfers that are more than R1000.
Both Standard Bank and Nedbank charge R49/ R50 for immediate transfers of more than R2000, and First National Bank has a flat rate of R45 for most of its accounts.
PayShap will be initially used for small-value transactions up to a maximum value of R3000.
BankservAfrica also stated that by the end of 2023, PayShap will hopefully be the country’s most popular electronic payment option. It stipulates that PayShap will be a powerful solution that can replace cash, as it estimates that about 90% of transactions in the country are made in cash.
Through this, the SARB hopes that PayShap will eventually catapult South Africa to a cashless society.
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