Enabling Regultions

Enabling regulations with Leticia Mentz ?

Innovation moves at an extremely rapid pace. So, the big question that regulators are asking is how they can ensure legislation is more agile and change-friendly. ?

Specific to the payment system, the South African Reserve Bank’s (SARB) Vision 2025 plays a big role in creating an inclusive payment ecosystem that meets the evolving needs of South Africans. The document sets out a roadmap that guides regulators and players in the industry on how to create an increasingly inclusive, innovative and cost-effective payment system. Vision 2025 also encourages a transparent regulatory and governance framework that will ultimately assist fintech companies to move closer to the regulated payments domain.?

More broadly, South Africa recently refocussed its efforts to ensure sound financial regulation, both from a prudential and market conduct point of view. The Financial Sector Regulation Act of 2017 introduced the South African Twin Peaks model, which established the respective regulators to take care of these important aspects. In support of this new regulatory framework, but also to further enable the fast-changing payments environment, the National Payments System (NPS) Act is also being reviewed.???

South Africa is actively working to develop financial services regulation that creates a more inclusive environment that will benefit fintech companies in this space. Through efforts like the formation of the Conduct of Financial Institutions Bill (COFI Bill), the introduction of the new Payments Industry Body (PIB) and the introduction of the Intergovernmental Fintech Working Group (IFWG), the expectation is that regulation will soon become an enabler for bank and non-bank participants alike.???

One piece of regulation currently going through the various approvals, is the COFI Bill. Included in this will be a focus on developing fintech regulation in the country, which works to promote innovative technology to drive greater financial inclusion. ?

While the COFI Bill will have wide ranging regulations to foster greater collaboration, it’s the recognition and formal licensing of fintechs that will have the biggest impact. Ultimately, this would further legitimise payment providers – something that has been a major sticking point for traditional players in the market. This will be important, as it will allow Third-Party Payment Providers (TPPPs) to have a greater role in the regulatory environment. ?

It would also ensure that fintechs are held responsible for the specific role they play in the payments domain, similar to banks, who are well-known for their internationally recognised risk and compliance measures. ?

The responsibility doesn’t just rest on the regulators though. Some of the country’s leading payment providers have a deep understanding of what both merchants and consumers want and need. They are playing a vital part in ensuring that any legislation developed is impactful and helps to further drive financial inclusion, transformation, and competition.

Fintechs, like Ozow, are paving the way when it comes to engagements and collaboration with the likes of the Payments Association of South Africa (PASA) and the South African Reserve Bank. It’s critical that they’re heavily involved in these discussions to help shape the future of payments in the country. ?