---
title: South Africa Is Opening Its Payments System to Fintechs. What Happens to the Banks?
description: South Africa plans to give fintechs, retailers and telecoms direct access to its national payments system from 2027, increasing competition with banks.
---

[AfroForm Blog | Business Insights for Africa](https://afroform.com/africa-business-registration-blog)

# [South Africa Is Opening Its Payments System to Fintechs. What Happens to the Banks?](https://afroform.com/africa-business-registration-blog/south-africa-is-opening-its-payments-system-to-fintechs.-what-happens-to-the-banks)

 Written by [Deborah Sanni](https://afroform.com/africa-business-registration-blog/author/deborah-sanni) | Oct 27, 2026, 11:11:25 AM

 

For years, South African fintech companies have needed banks to access key parts of the country's payment infrastructure. A business could develop a payment app, attract customers and help merchants accept digital payments, yet still depend on a bank to move money through the financial system.

That arrangement could soon change.

The South African Reserve Bank (SARB) is preparing reforms that would allow regulated non-bank businesses, including fintechs, telecommunications companies and retailers, to connect directly to the country's national payments infrastructure for approved activities.

The planned changes form part of the central bank's Payments Ecosystem Modernisation programme, which aims to increase competition, improve access to digital financial services and reduce transaction costs.

Non-bank participants are expected to begin connecting for testing and integration around March 2027, ahead of a broader rollout planned for the middle of that year.

For South African banks, the change could weaken their longstanding position as intermediaries in payment processing. For fintechs, it could create an opportunity to reduce dependence on banking partners, retain more revenue and compete for a larger share of the payments market.

The bigger question is whether greater competition will translate into cheaper, more accessible payments for consumers and businesses.

## Why Banks Have Had Such a Strong Position

Banks have traditionally occupied a central position in South Africa's payments infrastructure. Companies seeking access to the national system have generally needed to work through a bank rather than connect directly themselves.

This creates a distinction between building a payment product and controlling the infrastructure that allows it to operate.

A fintech might develop the technology, build a customer base and provide the interface customers use to make transactions. A banking partner may still be responsible for providing access to the underlying payment system.

That relationship can be useful, particularly for younger companies that do not have the resources or regulatory permissions to manage every part of the process themselves. But it can also create costs and dependencies.

Fintechs may pay fees for bank sponsorship and other services. They may also miss out on revenue opportunities associated with funds held through their banking arrangements.

Lesaka Technologies, a South African financial services group serving consumers and merchants, has previously identified bank sponsorship fees and foregone interest income as costs associated with its reliance on third-party banking services.

Direct access could give eligible businesses more control over these arrangements. Instead of automatically relying on a sponsor bank for specified payment activities, they could apply to perform those activities themselves under the new regulatory framework.

That does not mean every fintech will abandon its banking partners. Connecting directly requires technical integration, compliance systems, operational capacity and ongoing oversight. For some companies, continuing to work with a bank may remain the more practical option.

The change is that qualifying businesses could have another route.

## What the New Rules Could Allow

The proposed framework would move South Africa towards regulating payment activities according to the services a company performs and the risks those services create.

Under this approach, approved non-bank institutions could undertake specified payment activities without having to obtain a full banking licence simply to participate in payments.

The activities expected to become more accessible include issuing electronic money, acquiring payments from merchants and initiating payments. Direct access to clearing and settlement infrastructure would also reduce the need for a sponsor bank for qualifying activities.

Clearing and settlement are essential parts of the payment process. Clearing involves exchanging and processing payment instructions, while settlement completes the transfer of funds between the relevant institutions.

Access to these systems could give fintechs greater control over how their services operate and how much they pay to deliver them.

However, direct access will not mean operating without regulation. The Reserve Bank has said participating non-banks would still face requirements covering governance, the protection of customer funds, operational resilience and reporting.

The intention is to match regulatory obligations to the risks of each activity rather than apply the same requirements to every business simply because it participates in payments.

For fintechs, the opportunity is greater access. The responsibility is proving they can operate safely and reliably.

## Could Fintechs Make More Money?

The financial implications could be significant, particularly for businesses already processing large transaction volumes.

Under the current model, a fintech may have to pay a bank for access to services required to move customer money. Those costs can affect its margins and limit how much flexibility it has over pricing.

If a qualifying provider can perform certain activities directly, it may be able to reduce some of those expenses.

There are two broad ways a company could use the savings.

First, it could retain more of the revenue generated by existing customers, improving its margins. Second, it could lower its prices to attract more merchants and consumers.

A business might choose a combination of both.

Lower costs could also make it easier for smaller payment companies to compete against established providers. However, the benefits will depend on the expense of connecting to the system, maintaining the required technology and meeting regulatory standards.

Direct access is not automatically cheaper for every business. Companies will have to compare the costs of operating independently with the fees and services provided by their banking partners.

The most competitive providers will be those that can use the new arrangements to deliver reliable services at a cost customers are willing to pay.

## Retailers and Telecoms Could Become Stronger Payment Players

The reform is not limited to specialist fintech companies. Retailers and telecommunications businesses are also expected to benefit from greater access to payment infrastructure.

These companies already have something valuable: established relationships with customers.

Retailers operate physical stores where people buy goods, pay bills and conduct other transactions. Telecommunications companies have large customer bases and experience providing digital services, including mobile money in some markets.

With appropriate regulatory approval, businesses in these sectors could have more flexibility to develop payment products and connect them to the wider financial system.

Shoprite provides an example of how payments already contribute to revenue outside traditional banking. The retailer earns commissions from services such as money transfers and payments to third-party accounts.

Its existing model still involves banking partnerships, but it illustrates how a company can use its customer reach and distribution network to build a payments business.

Greater access to the national system could create more opportunities for retailers and telecoms companies to develop their own services or expand existing ones.

That could increase competition for banks, particularly in everyday payments, merchant services and other transactions where customers value convenience and low costs.

Banks would still retain important roles, including deposit-taking, lending and other financial services. The reform is about opening selected payment activities to more providers, not removing banks from the financial system.

## PayShap Shows Why Access Alone Is Not Enough

South Africa's existing instant-payment service, PayShap, demonstrates both the potential of modern payment infrastructure and the challenges of encouraging widespread use.

Launched in 2023, PayShap allows customers to make low-value payments in real time, including through simpler identifiers rather than relying entirely on bank account details.

By October 2026, the service had processed more than one billion transactions, transferring a total value exceeding R1 trillion, according to Reserve Bank Governor Lesetja Kganyago.

Despite that progress, the governor has argued that PayShap remains underused compared with other payment methods.

Several obstacles remain, including inconsistent customer experiences across participating banks, pricing differences, limited public awareness and insufficient acceptance by merchants.

For customers, the appeal of an instant-payment service depends on more than the speed of the transaction. It must also be affordable, easy to understand and accepted in the places where people want to use it.

The Reserve Bank is therefore pursuing other changes alongside opening access to non-banks. These include standardised QR payment arrangements, improved digital identity verification and efforts to make payment services work more consistently across providers.

The wider lesson is that infrastructure creates opportunities, but customers need a clear reason to change their behaviour.

## Will Consumers and Small Businesses Pay Less?

Reducing transaction costs is one of the central objectives of the reform.

For small businesses, payment fees can affect the cost of accepting digital transactions. For consumers, charges and complicated payment processes can discourage the use of electronic payments, particularly for smaller purchases.

If new entrants can provide payment services at lower costs, competition may encourage existing providers to review their prices and improve their products.

Retailers could also offer payment services that fit naturally into their existing customer relationships. Telecoms companies could build on their digital distribution networks, while fintechs could focus on specialised services for merchants or particular customer groups.

However, lower fees are not guaranteed.

A company that saves money by accessing payment infrastructure directly may choose to retain the savings rather than pass them on to customers. Meanwhile, the cost of meeting regulatory requirements and maintaining secure systems could offset some of the benefits.

The actual outcome will depend on how many providers enter the market, how effectively they compete and whether customers have meaningful alternatives.

For small businesses and underserved consumers, the most important measure will be whether the new system makes payments more affordable and easier to access.

## The Risks Behind Opening the System

A more open payments market also creates challenges.

Payment systems handle sensitive financial information and the movement of customer funds. A technical failure, fraud incident or weakness in operational controls can affect customers and businesses across the system.

Allowing more providers to connect directly therefore requires strong safeguards and clear responsibilities.

Companies will need appropriate systems for protecting customer funds, preventing fraud, managing operational disruptions and complying with reporting requirements.

Interoperability will also matter. If each provider develops a closed system that does not work well with others, customers could face the same fragmentation that the reform is intended to reduce.

The Reserve Bank has emphasised the importance of connected infrastructure that allows banks, non-banks and other participants to provide services across institutional boundaries.

The aim is not simply to create more payment companies. It is to build a system in which different providers can compete while customers continue to move money reliably between them.

## What Happens Next?

The Reserve Bank has indicated that rules governing payment activities and exemptions are expected by November 2026. Approved non-bank participants are expected to begin connecting around March 2027 for testing and integration, ahead of the planned mid-2027 rollout.

Those milestones are important, but the details will determine how the reform works in practice.

Fintechs will need to understand which activities they can perform, what authorisation they require and how much it will cost to connect directly. Banks will need to consider how their relationships with payment companies may change, while retailers and telecoms businesses will have to decide whether entering more deeply into payments makes commercial sense.

The transition will take time. Direct access will not eliminate the need for banks, nor will every non-bank provider immediately have the scale or resources to operate independently.

But it could change the balance of power in a market where banks have historically controlled access to essential payment infrastructure.

## The Bigger Picture for African Fintech

South Africa's planned reform reflects a wider question facing financial technology markets across Africa: who controls the infrastructure through which digital money moves, and how much does that control cost the businesses building services on top of it?

Fintech innovation depends on more than attractive apps. It also requires reliable payment networks, fair access, appropriate regulation and the ability to reach customers without unnecessary costs.

By opening selected parts of its payments system to regulated non-bank providers, South Africa is attempting to create more room for competition while preserving safeguards around the movement of money.

For fintechs, the opportunity is to gain greater independence and build more efficient businesses. For banks, the change could mean adapting to a market in which access to payment infrastructure is no longer as closely tied to traditional banking relationships.

For consumers and merchants, the test will be simpler: whether the changes produce payment services that are cheaper, more convenient and more widely available.

**South Africa is not removing banks from payments. It is opening the door for more businesses to compete in the system banks have long dominated. What happens next will depend on how effectively those new players turn access into better services.**

[View full post](https://afroform.com/africa-business-registration-blog/south-africa-is-opening-its-payments-system-to-fintechs.-what-happens-to-the-banks)

```json
{
  "@context" : "http://schema.org",
  "@type" : "BlogPosting",
  "author" : {
    "@type" : "Person",
    "name" : "Deborah Sanni"
  },
  "dateModified" : "2026-10-27T11:11:25.227Z",
  "datePublished" : "2026-10-27T11:11:25Z",
  "headline" : "South Africa Is Opening Its Payments System to Fintechs. What Happens to the Banks?",
  "image" : {
    "@type" : "ImageObject",
    "height" : 452,
    "url" : "https://44453315.fs1.hubspotusercontent-na1.net/hubfs/44453315/images%20%287%29.jpg",
    "width" : 678
  },
  "mainEntityOfPage" : "https://afroform.com/africa-business-registration-blog/south-africa-is-opening-its-payments-system-to-fintechs.-what-happens-to-the-banks",
  "publisher" : {
    "@type" : "Organization",
    "logo" : {
      "@type" : "ImageObject",
      "height" : 60.0,
      "url" : "https://44453315.fs1.hubspotusercontent-na1.net/hubfs/44453315/Logos/afroform-logo-1600x400-color.png",
      "width" : 240.00002
    },
    "name" : "Business Insights for Growing African Businesses"
  }
}
```