To start off the new year, we are sharing a clear update on PEM, South Africa’s fast-moving payments modernisation programme, and the key changes shaping the market.

Payments Ecosystem Modernisation (PEM) is a Strategy 2030 programme initiated by the SARB to transform digital payments in South Africa. The objective is to make digital payments secure, fast, simple and inclusive to everyone in South Africa. PEM is the SARB’s vehicle to reach their vision of a unified payments ecosystem - the Red Dot. To get there, the entire highway needs to be rebuilt. 

Here’s what you need to know:

Change in governance: Introducing PayInc

Until recently, South Africa’s payments landscape could be split into two: High-value payments through SAMOS, owned directly by the SARB, and low-value payments cleared through BankservAfrica, owned by a coalition of local banks with SARB oversight through the Payments Association of South Africa (PASA). The goal is to have both ecosystems living in one household. 

In September 2025, the SARB obtained control and oversight over the low-value system as co-owner (50%) of BankservAfrica - now relaunched as PayInc. This change is a pendulum swing that moves low-value payments modernisation from being market-driven to now including more regulator involvement. PayInc will own the rules, scheme governance, and participation requirements for all payment schemes, driving the SARB’s goal of creating a unified public payments platform. 

As it stands, high-value and low-value payments are still operating separately from each other over legacy, upgraded and newer rails. PayInc will ultimately converge all payment methods through the Hybrid Unified Payments Platform (H-UPP) - South Africa’s next-generation super-platform.

Impact on PASA and PIB

We’re moving from a three-tier governance model: SARB (regulator and licensing authority), PASA (industry body and scheme oversight), and BankservAfrica (scheme operator), to a simplified two-tier model: SARB and PayInc (operator and scheme oversight).  

The new model means PASA’s role will sunset as initially planned; its full withdrawal as the payment system management body (PSMB) is planned for Q1 2027. It is unclear if the work-in-progress Payments Industry Body (PIB) will replace it as the industry initially thought or if it will play a less important role in the ecosystem. A revised PIB Definition is now being drafted, with its constitution expected to be signed off on around Q2 2026. 

Driving instant payments adoption with QR+

QR codes offer the agility that merchants and customers need at checkout, at a fraction of the cost of card payments. As a result, merchants are incentivised to adopt it due to its lower fees and real-time settlements when paired with an instant payments rail. Emerging markets have leveraged them to accelerate instant payments adoption. 

A similar approach is planned for accelerating PayShap adoption. Also, because PSPs have a stronghold in e-commerce payments, enabling their direct participation will encourage merchant adoption and produce innovative QR code use cases. This is where the plus comes in - the ability to have the QR codes enriched by all players in the market to support varying use cases. 

QR+ spec v1.0 has officially been released

At a high level, the standard will:

• Support multi-rail processing

• Support merchant and payer-presented QR

• Support bi-directional flows

• Support payments from banks and non-banks

• Apply standard auth, fraud checks and registry validation

A more open licensing framework for non-banks

Fintechs and PSPs have a high barrier to clear and settle payments independently of banks. While licensing is necessary, it's not enough to nurture competition that ultimately benefits end users. 

The draft Authorisation and Licensing Framework materially changes how non-banks participate. With the new framework, non-banks can apply for the activities they want to perform, such as card acquiring, enabling store-of-value (SoV), and directly executing, clearing, and settling payments.

The SARB clarified an important distinction in the definition of deposit-taking:

• For banks: deposit-taking is allowed for preservation of value (lending, investment, balance-sheet activity).
• For non-banks: deposit-taking is allowed for store-of-value and purely for payment services.

With these opportunities, non-banks will also shoulder new responsibilities. Fintechs will face mandated standards for activities like payment initiation, stricter risk management and governance requirements, and ongoing obligations to safeguard funds in segregated bank accounts. Some areas, such as limits, prudential exposure, and alignment with FIC and cross-border regulations, are still being finalised.

Final takeaways

PEM has quickly moved from conceptualisation to execution, and banks and PSPs now need to plan for a fundamentally different, more competitive, and more inclusive landscape. Systems will need to be rebuilt to keep pace with the level of change typically seen in payment ecosystems governed and operated by the regulator. 

The end goal is maximum financial inclusion. For incumbents and new entrants, this shift is an opportunity to create consumer-centric products while still balancing commercial priorities.

Contact us to discuss how your institution can prepare for South Africa’s payments future.