Fintech group Capital Appreciation (Capprec) expects that fees for the PayShap digital payments platform will remain high for the foreseeable future as banks look to recoup the costs that went into developing it.
In March 2023, BankservAfrica, together with the Payments Association of SA, launched PayShap, which offers consumers cheap access to instant payments across participating banks using cellphone numbers.
BankservAfrica is the largest automated payments clearing house in Africa and processes bank card, ATM and EFT transactions between the country’s banks as part the SA National Payments System.
The company has been working for years to implement a system that would make it simple for people to send and receive money across banks’ national payments system. This is part of a wider plan called the rapid payments programme, which includes cross-border payments.
Capprec CEO Brad Sacks told Business Day that its software business, Synthesis, helped to develop PayShap.
“We were very involved. We actually did a fair amount of work on PayShap itself, for Bankserv to be able to create the platform for the development of PayShap. That architecture was created by Synthesis on behalf of Bankserv. We have also been working with some of the traditional banks in enabling them to deploy the PayShap platform,” he said.
Capprec’s business includes selling payment terminals such as point-of-sale devices, including debit and credit card machines.
The group also provides the back-end systems that enable these devices to accept payments, and the technology that banks and other financial services companies use to add features to their digital platforms, including loyalty programmes and prepaid vouchers.
“It’s an area where we have had quite a bit of success and it’s a good innovation for the country. Unfortunately, the economics of PayShap haven’t met with the SA Reserve Bank’s initial expectations, if you look at what has happened in other countries that have introduced a similar type of [platform],” he said.
‘Close to zero’
Sacks pointed to India as a country that took on a similar initiative to push up financial inclusion. He explained that the costs to consumers are very low — “close to zero” — as the government had taken on the costs to develop the platform.
“Here in SA, because the banks had to fund PayShap development, they charge fees for use of the PayShap rails and that fee is still relatively high compared to what the initial expectations were,” said Sacks.
In SA, Tymebank is the only bank that offers Payshap for free, while transaction fees can go up to R27 for payment activity between R1,000 and R3,000 for all other participating banks. Banks typically charge little to no fees for transactions up to R100.
Last week, BankservAfrica announced that the number of transactions processed on PayShap had leapt to 30-million since its launch, a sign of demand for faster payments in SA.
This is up from 250,000 transactions a year ago in May 2023.
BankservAfrica said the value of transactions made on the platform now stands at R19.5bn since its launch.
Earlier in 2024, the company reported that the PayShap operation saw over 14-million transactions, with a settlement value in excess of R9bn from March 13 2023 to February 29 2024. This indicates a huge jump in the number and value of transaction in the months since.
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