15 Transactions with Payshap

My experience with South Africa’s instant payment system

In the past five years, South Africa's payments industry has undergone significant transformation. I was fortunate to have a front row seat and backstage access to some of these projects and as a consumer, I was most excited to see the Rapid Payments Programme (RPP) launch Payshap.

Payshap was launched in March 2023 as an alternative to cash payments. It settles transactions within 10 seconds and transactions can be paid into a participating bank account or bank-registered cellphone number (PayshapID). It is a successor to the real-time clearing system (RTC) launched in 2006. Unlike Payshap, RTC settles within 60 seconds to participating bank accounts, and it has a significantly higher item limit of R 5 million ($260k) compared to Payshap’s lower item limit of R3000/$150.

Since Payshap’s launch, it is estimated to have processed nearly 10 million transactions worth R6.6 billion/$32 million. I made my first Payshap transaction in June 2023 and was eager to be a frequent user. However, as of Feb 2024, I have only used it 15 times. What happened?

A peak into my payment method behaviour

My payments profile provides some insights: I am not a frequent cash user and I rarely need to make urgent transfers. Still, there were missed opportunities that could have increased my use of this instant payment system. Let’s look at three scenarios.

Scenario 1: I am at a cashless concert and I offer to get food for my friends.

Kganya: “You can send the money via Payshap. I’ll get it immediately.”

Friend: “I can send it via what?”

I shouldn’t be surprised that people didn’t know what it was. Of course, being in the payments and banking industry made it easier for me to adopt the idea and product. However, because of the lack of awareness within my community and network, I spent time explaining the benefits of the payment method rather than actually using it.

Besides marketing, I think awareness was limited because the product went live with four banks; Standard Bank, Absa, FNB and Nedbank. It was a great start but still left plenty in the dark.

Scenario 2: I just had my braids done and it's time to pay the stylist.

Kganya: I can Payshap it to you. It's like an EFT except it’s immediate. Your bank supports it.

Stylist: “Oh. Can you just send the cash to my number instead? I’ll withdraw it later”

Over the past year, I've suggested using Payshap for my hair appointments on at least three occasions, but it hasn't been taken up. We both bank with the same institution so instant payments aren't necessary because banks usually reflect book transfers immediately. Regardless, she prefers and insists on using cash.

This situation is not uncommon in South Africa. The World Bank estimates that 85% of adults are banked; however, account utilisation is low. Transaction fees and bank charges deter account holders from using digital payment methods. For example,  RTC is particularly known for its high transaction fees, peaking at R50 per transaction. To put this into perspective, the average taxi fare (public transport via minibus) from Pretoria CBD to Joburg CBD was R55 in 2022.

Scenario 3: I convinced a friend to use it for the first time.

Kganya: “Ok done”

Friend: “I don’t see it”

Kganya: “Oh, it says your ID doesn’t exist.”

Friend: “You see? I told you.”

Fortunately, this was not a common occurrence (it happened only once), but it did happen with a sceptical friend who decided to give it a try for the first time. Her disappointment gave me the impression that she would not be trying it again anytime soon.

This could have been mitigated if:

1. Account/ID validation was made upfront or as the first step of the transaction process

2. Existing accounts and cellphone numbers were automatically enabled for the product

Final thoughts:

I felt and appreciated Payshap’s impact when I needed to send cash for an emergency and speed was of the essence. It saved unnecessary trips to the ATM and eased the burden of high transaction fees that come with immediate settlements. I will be using it again and hopefully I will convert my hairstylist this year.

What do you think about it?

P.S I am also looking forward to getting some basic information about it from ChatGPT: