The South African The South African National Payment National Payment
System System –– Observations Observations and Trendsand Trends
Dave C MitchellDave C MitchellSouth African Reserve BankSouth African Reserve Bank
World Bank ConferenceWorld Bank ConferenceCape Town, South AfricaCape Town, South Africa
April 2009 April 2009
Payment System NetworksPayment System NetworksPayment System NetworksPayment System Networks
CLS Network
Settlement Network
Clearing Network
Payment Network
Payment NetworkCustomer Network
Customer NetworkCustomer Network
CLS Services
Central Bank
Central Bank
SARB
PCH
Card
CLC
PCH
STRATE
Retailer
PCH
EFTs
ATM
Broker
Bankserv
BANK
Post Bank
Clearing Bank
Settlement Bank
Customer Network
Non-Clearing Bank
SAMOS FRONT-END FACILITIES
BANK
PositionMonitor
InternalProcessingSystem
SARBLLINK
SWIFTTerminal
SARB; LINK Interface
SAMEX
Reserve Bank
SAMOS
PARTICIPATING
CENTRALDEPOSITORY
FIR
SWIFT Interface
FinancialInstrumentRegister
LoanAccount
SettlementAccount
DynamicCollateralManagement
CD
SWIFT
Facilities available to the banksFacilities available to the banksFacilities available to the banksFacilities available to the banks
Legal Foundat ionLegal Foundat ionLegal Foundat ionLegal Foundat ion
South African Reserve Bank Act
National Payment System Act (including Directives)
Payment Association of South Africa (PASA) Constitution
Payment Clearing House (PCH) Agreements
Payment Clearing House (PCH) Rules
South African Reserve Bank Act
National Payment System Act (including Directives)
Payment Association of South Africa (PASA) Constitution
Payment Clearing House (PCH) Agreements
Payment Clearing House (PCH) Rules
The S. A. Reserve Bank and the Payments The S. A. Reserve Bank and the Payments Associat ion of South Africa (PASA)Associat ion of South Africa (PASA)The S. A. Reserve Bank and the Payments The S. A. Reserve Bank and the Payments Associat ion of South Africa (PASA)Associat ion of South Africa (PASA)
SA Reserve BankSA Reserve Bank
BankBank
PASAPASA
BankBank
BankBank
BankBank
BankBank
BankBank
BankBank
Exec OfficeExec Office
BankBank
NPSD
Settlements Settlements –– Wholesale paymentsWholesale paymentsSettlements Settlements –– Wholesale paymentsWholesale payments
2000 2001 2002 2003 2004 2005 2006 2007 2008All Streams 42,239 49,430 47,339 49,705 51,533 57,574 59,331 72,399 89,381Real Time Line 26,642 38,175 43,764 46,251 47,724 53,242 54,320 66,562 82,920
-
10
20
30
40
50
60
70
80
90
100
Ran
d -T
rillio
n
Total value settled vs Real Time Linesettlements
Settlements Settlements -- Retail paymentsRetail paymentsSettlements Settlements -- Retail paymentsRetail payments
67%
19%
8%
Payment Streams 2008(excluding RTL)
+EFT CR TOT
+CLC TOT
+EFT DR TOT
+CC TOT
+ZAPS TOT
+SASWITCH TOT
+VISA TOT
+DR CR TOT
NAEDO
MasterC
RTC
+AEDOTOT
+MZANSI
Settlements Settlements –– Retail post Risk Reduct ionRetail post Risk Reduct ionSettlements Settlements –– Retail post Risk Reduct ionRetail post Risk Reduct ion
-
50
100
150
200
250
300
350
400
450
Jan/
00
Apr/0
0
Jul/0
0
Oct
/00
Jan/
01
Apr/0
1
Jul/0
1
Oct
/01
Jan/
02
Apr/0
2
Jul/0
2
Oct
/02
Jan/
03
Apr/0
3
Jul/0
3
Oct
/03
Jan/
04
Apr/0
4
Jul/0
4
Oct
/04
Jan/
05
Apr/0
5
Jul/0
5
Oct
/05
Jan/
06
Apr/0
6
Jul/0
6
Oct
/06
Jan/
07
Apr/0
7
Jul/0
7
Oct
/07
Jan/
08
Apr/0
8
Jul/0
8
Oct
/08
Ran
d -B
illio
ns
Electronic Fund Transfers and Cheques
Cheques EFT Credits
EFT Debits ZAPS
Overview of Overview of cards in South Africacards in South AfricaOverview of Overview of cards in South Africacards in South Africa
Total credit cardsTotal credit cards 66 110 819110 819
Total debit cardsTotal debit cards 2121 872 669872 669
Total number of merchantsTotal number of merchants 129 841129 841
Average credit card transaction valueAverage credit card transaction value R 510R 510
Average signatureAverage signature--based card transaction value based card transaction value R 380R 380
Average PINAverage PIN--based debit card transaction valuebased debit card transaction value R 225R 225
[2007 figures from the big four banks (excluding ATM and Garage cards)]
RealReal--Time Clearing (RTC)Time Clearing (RTC)RealReal--Time Clearing (RTC)Time Clearing (RTC)
nn The RTC payment stream implemented in March The RTC payment stream implemented in March
2007;2007;
nn RTC payment instructions processed immediately RTC payment instructions processed immediately
and payee credited within 60 seconds;and payee credited within 60 seconds;
nn Interbank settlement within one hour;Interbank settlement within one hour;
nn Three banks actively participating in RT C;Three banks actively participating in RT C;
nn Average monthly value settled in 2008 Average monthly value settled in 2008 -- R1,1 billion. R1,1 billion.
Oversight Oversight -- MacroMacroOversight Oversight -- MacroMacro
Macro Level
Observe/Monitor. Credit Risk. Liquidity. Legal. Operational. Reputational
. International Developments
. Principles
. Best Practice
NPS
SAMOS
Bank
STRATE
STRATE
Bankserv
Equity Markets
Bond Market
Retail Payments
SARB
CD
FIR
Analyse & Evaluate
Develop
Implement
Bank
Oversight Oversight -- MicroMicroOversight Oversight -- MicroMicro
DevelopParticipantProfiles
Discuss withBank Supervision
Onsite visit
. Rating/evaluation
. Oversight report
. Recommendations
Iterative process
Feedback to institution
. Payer profile
. Beneficiary profile
. Net effect
. Loan transaction flow
. Volume and value
. Liquidity/Collateral usage
. Risk reduction initiatives
. Operational issues
. Payer profile
. Beneficiary profile
. Net effect
. Loan transaction flow
. Volume and value
. Liquidity/Collateral usage
. Risk reduction initiatives
. Operational issues
. NPS Act
. Directives and position papers
. Vision 2010
. Industry issues
. NPS Act
. Directives and position papers
. Vision 2010
. Industry issues
NPS GovernanceNPS GovernanceNPS GovernanceNPS Governance
SANPAYAssociationsGovt.
PolicyConsultEngage
SARB Act (Section 10)NPS Act
PASAPASA Constitution
PCH ’ sPCH Agreements
PCH PG ’ s
Authorise
Low Value
CollectionsOperators
ConsultEngage
PSSF ’ s
AdvisoryBody
NT
BankingAssociation
Consult
ConsultEngage
3rd Party
Providers
History/MilestonesHistory/MilestonesHistory/MilestonesHistory/Milestones
nn 19951995–– Publication of NPS Framework and Strategy Publication of NPS Framework and Strategy
(“Blue Book”).(“Blue Book”).
nn March 1998March 1998–– Implementation of the SAMOS System.Implementation of the SAMOS System.
nn October 1998October 1998–– Promulgation of NPS Act.Promulgation of NPS Act.
History/MilestonesHistory/MilestonesHistory/MilestonesHistory/Milestones
nn 1999/20001999/2000–– Enhancement of the SAMOS System:Enhancement of the SAMOS System:
•• Continuous Processing Line (CPL);Continuous Processing Line (CPL);•• DVP for financial market transactions DVP for financial market transactions
(STRATE).(STRATE).
nn 2001/20022001/2002–– Introduction of risk reduction measures (item Introduction of risk reduction measures (item
limits in various payment streams limits in various payment streams –– reduction reduction of values in batch settlements);of values in batch settlements);
–– Formal establishment of the Oversight Formal establishment of the Oversight function.function.
History/MilestonesHistory/MilestonesHistory/MilestonesHistory/Milestones
nn 2003/20052003/2005–– Enhancement of the intraday monitoring Enhancement of the intraday monitoring
capabilities of the SAMOS System;capabilities of the SAMOS System;–– SameSame––day squareday square--off;off;–– Continuous Linked Settlement (FX).Continuous Linked Settlement (FX).
nn 20062006–– Vision 2010 publishedVision 2010 published..
History/MilestonesHistory/MilestonesHistory/MilestonesHistory/Milestones
nn 2007/20082007/2008–– Formal regulation of nonFormal regulation of non --banks in the banks in the
NPS;NPS;–– Directives for System Operators and Directives for System Operators and
Third Party Service Providers;Third Party Service Providers;–– Establishment of NPSAB;Establishment of NPSAB;–– Review of the network infrastructure and Review of the network infrastructure and
RTGS application.RTGS application.
Where to in the future Where to in the future -- 11Where to in the future Where to in the future -- 11
nn Commence implementation of the settlement Commence implementation of the settlement
infrastructure and applications;infrastructure and applications;
nn Continue the focus on nonContinue the focus on non--bank participants in the bank participants in the
formal oversight process;formal oversight process;
nn Increased focus on CLS operational and oversight Increased focus on CLS operational and oversight
activities; activities;
Where to in the future Where to in the future -- 22Where to in the future Where to in the future -- 22
nn Continue participation in regional and international Continue participation in regional and international
initiatives; initiatives;
nn Commence Framework and Strategy document for Commence Framework and Strategy document for
beyond 2010; and beyond 2010; and
nn Evaluation and possible implementation of the Evaluation and possible implementation of the
recommendations of the Competition Enquiry.recommendations of the Competition Enquiry.
Thank yoThank youuThank yoThank youu