EFTs are one of the last remaining traditional payment methods to undergo modernisation and change is imminent. How can you ensure that your bank is ready for the future of EFT processing?
The first debit order was cleared in 1981 and since then, EFTs (electronic funds transfer) have grown to support salaries, taxes, P2P, P2B, and B2B payments in South Africa. Over the next few decades, the national payments system (NPS) leapfrogged major economies by introducing faster payments on future-fit technology. Yet, EFTs remain on legacy architecture that grows in disparity as the industry continues to evolve. So, what is the future of EFTs in South Africa?
Every bank needs to prepare for the likelihood of EFTs migrating to ISO 20022 message standards. This likelihood is further compounded by the regulator’s focus on ensuring that all electronic transfers are compliant with Financial Action Task Force (FATF) regulations. A move to ISO 20022 will enable EFTs to carry the required full information about the originator and beneficiary, making it easier to detect and mitigate money laundering and terrorist financing.
In addition, there is the possibility of PayShap overtaking EFTs as the preferred electronic payment method. This could be accelerated when changes such as an item limit increase and competitive pricing are eventually implemented.
If your bank is contemplating any of these changes, you are likely thinking about the cost involved in enhancing, maintaining, or replacing your EFT processing system in the future. The transition into the next version of EFTs can be made easier with a cloud-native solution. How?
If your bank supports EFT, Real-Time Clearing (RTC), PayShap, and DebiCheck, you’ll know that EFT is one of the payment methods that hasn't been built on ISO 20022 standards. As a result, you are likely processing EFT on legacy or separate core banking systems.
You could manage all your low-value transactions through one core banking system by integrating with an ISO 20022-based solution such as Electrum’s. The simple messaging protocol enables banks to be ready for change and adopt new payment methods at speed. In addition, our solution is directly integrated with BankservAfrica and can support your bank’s EFT, RTC, and PayShap transactions through a single API integration.
Our cloud-native solution allows the core banking system to process single EFT transactions to our platform which would in turn batch the transactions on behalf of the bank before clearing it with BankservAfrica. The approach removes the onus on the bank to maintain a file-based platform while remaining compliant with clearing requirements. In addition, for increased transparency, our solution provides end-to-end visibility with real-time reporting on the status of each transaction.
To reduce payment failures, each transaction is validated against a set of rules before it’s cleared. Rules include check digit verification (CDV), future-dated transactions, item limits, and service types to ensure successful payments and receipts.
Electrum’s Clearing House Payments Solution is directly integrated with BankservAfrica to seamlessly update the validation rules with the latest changes. With this integration, banks remain compliant with scheme rules and they can manage technical resources efficiently by limiting costs associated with ad hoc changes.
Account verification services are essential for reducing fraud for service providers. To join, banks must integrate their channels and core banking systems with batch or real-time AVS to receive and respond to verification requests.
Electrum’s support for both services enables banks to seamlessly extend the benefits of account verification to their commercial and corporate clients with just one API integration, ensuring streamlined operations and enhanced security measures.
EFTs remain the backbone of any payments business. All banks should have resilient and scalable processing platforms to support the volumes and value-added services that make these payments essential to every consumer in South Africa. Our proven next-generation software, AWS technology, and deep payments expertise ensure banks are ready for industry changes while they lead the pack with innovative and future-proof EFT solutions.
If you would like to learn more about modernising your EFT service, chat with us today about our Clearing House Payments solution.