The South African Reserve Bank (SARB) has completed a review of the country’s National Payment System Act, and published its findings and recommendations this week, according to a report from Business Insider. The bank is proposing several changes that could eventually allow a digital rand or existing cryptocurrencies to be accepted as recognized payment options and reduce the banking industry’s stranglehold on payment services.
The SARB reportedly hopes to see updated legislation by 2020. That law has remained unchanged since its last minor update in 2008. The bank has apparently recognized that change is needed if the country is to benefit from the last decade’s dramatic innovations in financial technology.
As Business Insider reports, the SARB recommendations focus on several possible areas of change. Under the current law, the payment system favors traditional banks. As a result, companies that want to operate services like “a mobile wallet, QR-code payment system, mobile money platform, or anything similar” can only do so by partnering with a bank.
The SARB’s review asserts that South Africa needs "an enabling environment for the provision of payment services independently of banks." The bank suggested that liberalization of those laws could spark innovation in areas like retail shopping and other sectors involving "domestic low-value retail payments."
The bank’s report also acknowledged that digital currencies could potentially play a central role in the country’s payment system, which currently requires that all payments be made using money issued by the central bank. The SARB suggested that could eventually change:
"It is, however, recognised that in future the SARB may wish to allow or require settlement of other emerging currencies, such as central bank digital currencies and [virtual currencies]."