The South African Reserve Bank has unveiled a comprehensive digital payments strategy in line with its Vision 2025, which was published six years ago. The report acknowledged that the adoption of digital payment technologies in the country has been slow and proposed various measures to align with the vision, including the exploration of cryptocurrency and central bank digital currency (CBDC).
While South Africa’s financial services sector, particularly banking, is well-established, the report revealed that individuals with lower and middle income levels continue to rely heavily on cash, despite the advancements in digital payment technology. This can be attributed to user costs, limited financial literacy, restricted accessibility, and a lack of trust.
The roadmap outlined plans to enhance the accessibility of financial technology, modernize payment infrastructure, and eliminate barriers to usage. However, it emphasized that these plans are primarily focused on the domestic market.
In South Africa, crypto assets are not considered legal tender but are not prohibited either. Notably, major retailer Pick n Pay accepts Bitcoin as a payment method at more than 1,600 locations. The South African Reserve Bank is studying international best practices for cryptocurrency regulation and is open to leveraging distributed ledger technology.
The SARB has established a two-year timeline for the sandbox, which will facilitate the integration of cryptocurrency into the country’s financial system through the licensing of exchanges.
Similarly, the SARB is conducting research on retail CBDC, which has the potential to offer cost-effectiveness and enable real-time online and offline peer-to-peer digital payments. The roadmap recommends further exploration of both retail and wholesale CBDC over the next two years.
Tokenization, although recognized for its enhanced security, faces regulatory obstacles in South Africa. However, the SARB is closely monitoring the growth of this technology.
In conclusion, the South African Reserve Bank is taking significant steps to advance digital payments in the country, with the aim of aligning with its Vision 2025. The roadmap includes measures to improve accessibility, modernize infrastructure, and address barriers to adoption. The SARB is also exploring cryptocurrency and CBDC, while keeping a close eye on the development of tokenization.