New white paper focuses on the cross-border payments dilemma in the SADC
With a population spanning almost 400 million people across 16 countries, the Southern African Development Community has the widest-reaching regional bloc in Africa, holding massive appeal for trade exchanges to strengthen economies and benefit communities. However, unlocking this potential to enable a seamless and regulated flow of money across borders has been one persisting challenge that requires solving.
A new white paper, ‘SADC Regional Payments Interoperability – exploring the value of mutual digital infrastructure to drive more formalised, accessible and inclusive payments in the region’, by BankservAfrica together with Cenfri, explores the region’s cross-border payments landscape. Examining the different use cases, this paper also highlights the barriers to growth and elaborates on how a regional payment solution could work for the good of all.
“With exciting innovations and new product launches, payments is an exciting space in the region. However, these fall short of the one critical need: broad-based and all-to-all interoperability. The ability for money to flow from wallets to bank accounts inexpensively enhances inclusivity, reduces pain points and can encourage the move from cash and informal money send. Achieving this is key to solving the cross-border payments dilemma in the SADC,” explains Ruhling Herbst, Executive Head: Africa Business Development at BankservAfrica.
The other chief concerns and opportunities centre around the current market and consumer dynamics - the considerable lower-value Person-to-Person (P2P), Person-to-Business (P2B) and Business-to-Business (B2B) flow into the region brings the opportunity for providers to scale their offerings and to tackle the challenges arising from the emergence of fintechs. On a consumer level, the preference for cash remains high as most cross-border transactions take place informally. There’s also the issue of commercial, regulatory, infrastructure and consumer barriers, ranging from agent costs to liquidity management, foreign exchange costs and limited data availability, that will need addressing in the first, middle and last mile.
A key finding from the report is that service providers need to be empowered to offer low-cost, high-quality cross-border payment services.
Since 2021, the Transactions Cleared on an Immediate Basis (TCIB) Payment Scheme, managed and operated by BankservAfrica, has been live. Owned and supported by regulators, central banks and established financial institutions in the region, TCIB has been developed as a solution for cross-border challenges.
“From our research we find that reliable cross-border fast retail payments are critical to drive sustainable and inclusive local economies and communities. Regional scale is vitally important if accessibility and affordability barriers are to be overcome. The cross-border terrain is very complex if we tackle it individually but so much more achievable if we face it together as a regional scheme,” say Barry Cooper, Technical Director at Cenfri.
Having gained the support of key bank and non-bank participants across the region in the past 18 months, this valuable, instant digital payments infrastructure is well-positioned to facilitate the movement of remittances inexpensively between authorised financial service providers in the region and to activate the growing network of regulated payment service providers.
“Ensuring broad use of cross-border retail payments so that everyone can access these will depend on creating a network of different payment service providers. Through this, broad-based interoperability can be achieved, and collaboration between key cross-border payment providers will strengthen. As a solution for Africa, by Africa, we believe TCIB Payments Scheme, as a centralised platform featuring cutting edge technology and growing levels of support can make this happen,” ends Herbst.
Ends
Download the full report here.
Contact Lebogang Serapelwane for more information: lebogang.serapelwane@fleishman.co.za or (073) 063 4607.
About BankservAfrica
BankservAfrica is the trusted payments partner and Financial Markets Infrastructure (FMI) to the financial services industry. As the largest automated payments clearing house in Africa we clear and process billions of low values card, ATM and EFT transactions annually. Our role in the South African National Payments System (NPS) is to facilitate interoperability between the banks and ensure regulatory compliance with our regulators against international banking security best practice and standards and reduces risk and complexity in the industry.
We continue to strive to be a world class and pre-eminent payments operator, innovator and payments partner of choice in Africa, by simplifying our worlds through combining trusted transactions with sensitive information.
BankservAfrica’s national responsibility is to provide safe financial payment services for 60.6 million South Africans, irrespective of their location in partnership with our shareholders and partners.
With over 50 years in South Africa, BankservAfrica operates 24/7, 365 days a year and delivers on very strong SLAs.