National Payment System Act 78 of 1998

The National Payment System Act 78 of 1998 (NPS Act) is the primary legislation governing payments in South Africa and the umbrella statute under which the South African Reserve Bank (SARB) manages, administers, regulates, operates and supervises the national payment, clearing and settlement system. It is the foundation of the regulatory perimeter within which banks and, increasingly, non-bank fintech participants provide payment services. The Act empowers the SARB to oversee the safety, integrity, effectiveness and efficiency of the national payment system (NPS) and to take steps to reduce systemic and settlement risk. A central mechanism is designation: the SARB may designate a settlement system, and may designate non-bank clearing system participants, where this is in the interest of the integrity, effectiveness, efficiency or security of the NPS, the principal route by which non-banks gain access to clearing. The Act provides for the recognition of a payment system management body (historically the Payments Association of South Africa) to organise and manage participation in the system under SARB oversight. It establishes settlement finality and addresses netting and the treatment of collateral, protecting completed settlements from being unwound in insolvency. It empowers the SARB to issue directives, to attach conditions, to conduct oversight and inspections and to impose sanctions for non-compliance. Importantly for fintech, the SARB's longstanding position under the Act is that only registered banks may issue electronic money, which has shaped the e-money and stored-value market. The Act is currently the subject of a major reform process, a policy review and a draft activity-based authorisation framework intended to open the NPS to a wider range of bank and non-bank participants, but it remains the operative statute. As enabling legislation, it is the parent of the SARB's directives, position papers and designation notices.

1. 1Empowers the SARB to manage, regulate, oversee and supervise the national payment, clearing and settlement system
2. 2Designation of settlement systems and of non-bank clearing system participants, the route to NPS access for non-banks
3. 3Recognition of a payment system management body to organise participation under SARB oversight
4. 4Settlement finality, netting and collateral protections against insolvency unwinding
5. 5SARB powers to issue directives, attach conditions, inspect and sanction
6. 6Basis for the SARB position that only registered banks may issue electronic money; currently under activity-based authorisation reform