AFRICA: REAL-TIME PAYMENTS Southern Africa’s major banks will shortly undergo what could be described as major transplant surgery – a procedure that will boost the region’s cardiovascular system for payments. The man overseeing the operation is Jan Pilbauer, CEO at BankservAfrica, who previously played a pivotal role in the modernisation of Canada’s core clearing and settlement payments infrastructure. Pilbauer is driving the development of BankservAfrica’s Rapid Payments Platform (RPP), which should go live in the second half of 2021 – the latest piece in an infrastructure jigsaw that BankservAfrica has been building for some time. It already operates the Automated Clearing House (ACH) for South Africa and also provides crossborder interbank clearing and integration into the Southern African Development Community’s (SADC) Real Time Gross Settlement system, allowing efficient processing of high-volume, low-value payments for 15 more countries. “The real-time nature of the rest of the world has not gone unnoticed in Africa; it’s a journey a lot of people have been on,” says Martin Grunewald, BankservAfrica’s chief business officer. “The challenge in Africa is infrastructure.”
Under its new leadership, BankservAfrica is shaking up the continent’s discombobulated financial ecosystem. The vision is to make BankservAfrica the leading ACH, not just in South Africa and SADAC, but on the entire continent. In a recent interview, Pilbauer said he wanted to ‘build something that is the pride of Africa and shows the world how payments can be done. Failure is not an option’. Reform is a bold and badly needed ambition. Transferring money simply between banks in South Africa can commonly take up to two days as BankservAfrica, which is predominately owned by FirstRand, Standard Bank, Absa and Nedbank, currently still uses a batch payments system for electronic fund transfer (EFT). And, although South Africa was among the first countries to introduce real-time clearing (RTC) way back in 2006, banks continue to demand a sizeable fee for it as that process is underpinned by a messaging protocol that has been left unchanged for more than two decades. As a result, RTC transaction volumes only comprise three per cent of total EFT volumes – an obvious anomaly in an age when consumers are increasingly demanding instant everything, and a serious impediment when trying to
transition an entire continent away from cash, as has been evidenced during the pandemic. It was those countries with a well-established RTC system that was affordable for consumers to use that saw the biggest migration away from notes and coins. But in South Africa, there was significant additional demand for withdrawals from ATMs. There is another compelling reason why banks throughout the African continent need to get their acts together to provide faster and cheaper, secure digital payments: a real and present danger to their payments’ business presented by alternative payment platforms. “It’s no longer just competition between the banks,” says Grunewald. “Suddenly, there are other wallets, other facilities coming in to the space.” Mobile money transfer is probably the most significant. Led by M-Pesa in Kenya in 2007, a partnership between network operators Vodafone and Safaricom, there are now almost 300 similar m-money schemes globally, but Africa remains the epicentre with the monthly values of mobile money payments increasing 25 times between 2010 and 2018. Their success has led some African banks to introduce their own m-money transaction services in partnership with telecoms.
A rapid response
2021 will be a pivotal year for payments as BankservAfrica introduces a new, API-driven, real-time platform, accessible to every institution and paytech alike. Chief Business Officer Martin Grunewald explains what it hopes to achieve www.fintechf.com
Issue 8 | ThePaytechMagazine
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