SARB to replace PayShap with Red Dot QR payments
The South African Reserve Bank (SARB) has announced a strategic initiative titled Payment Ecosystem Modernization (PEM), aimed at replacing existing electronic and instant payments with more advanced digital systems.
While card payments and electronic transfers are already widely used, SARB emphasized the need to introduce progressive digital alternatives to serve the millions of unbanked citizens across the country.
A recent attempt to deploy a local instant payment system, PayShap — which uses mobile numbers as proxies for bank account numbers — encountered several barriers, including inconsistent transaction limits and fees across banks.
“PayShap suffers from slow decision-making, a lack of proxy standardization, limited coordinated marketing and communication, inconsistent user interfaces, and unclear pricing models, which have hindered adoption,” SARB stated.
In response, SARB plans to introduce a new QR code–based real-time payment system with enhanced authentication, referred to as Red Dot, named after a Singapore-based fintech firm.
The modernization effort will center on building a National Payment Utility (NPU) — still in development — which will be anchored by a universal digital financial ID system based on e-signatures, Know Your Customer (KYC), and Financial Intelligence Centre Act (FICA) protocols.
“This will reduce fraud, increase compliance, and improve accessibility to financial services,” SARB said.
A cash-oriented society
The regulator emphasized that the reforms are not intended to eliminate cash.
“Rather, the aim is to provide viable alternatives to cash and to build a cash-oriented society — one where cash is still available in scenarios where digital options may be impractical,” the statement added.
The PEM initiative also encourages market players to offer affordable savings solutions. However, SARB noted it may intervene in the future to introduce a cost-effective public option if necessary.
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