The Business Case
for PayShap

Absa-CIB-Author

Richard Stocken

Head: Cash Management
Product, Absa Corporate
and Investment Banking.

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Launched in March 2023, PayShap is South Africa’s new low-value, real-time rapid-payment platform.

It’s an industry-led initiative that makes digital payments more convenient and reduces reliance on cash in the economy. But while most of the talk around PayShap has focused on retail consumers, Richard Stocken, Head of Cash Management Product at Absa Transactional Banking, says the platform has huge potential for corporates as well.

“From a corporate perspective, PayShap is a low-cost alternative to real-time clearing [RTC],” he explains, adding that Absa is currently integrating the platform into its RTC API – a product that already processes more than 90% of Absa’s corporate real-time payments. “Our clients are using it to get low-value payments to their customers fast,” he says. “From a payment perspective, it’s the same value proposition as real-time clearing, but as a high volume payment type for the mass market it is likely that costs to be lower than RTC over time”.

A particular area of interest for corporates is a capability in development for 2024, called “Request to Pay”. This will enable a business to send a request to a customer to pay an amount. The customer will be able approve that payment via their mobile banking app. Unlike a debit order, where the instruction is sent to the customer’s bank and the amount is automatically debited from their account, Request to Pay will allow the customer to approve the payment and customise its value.

“We don’t see this replacing traditional debit orders,” says Stocken. “Debit orders are very convenient for the likes of insurance companies, which submit large files of debit orders for collections. Those run automatically, and don’t need intervention by the payer to pay the amount. However, a problem that companies that do large debit order runs have is that they get ‘unpaids’ back – for example, if the account has closed or there are insufficient funds in the account. We believe that the Request to Pay service will benefit these businesses in situations like that, with their arrears collection.”

Secure, instant payments

At its launch, PayShap allowed maximum one-off payments of R3 000. This has added a layer of security, but as Stocken emphasises, it’s certainly not the system’s only safeguard.

“PayShap is not a stand-alone application,” he says. “The payments are made through bank channels. At its launch it had four participating banks, including Absa, and the platform was embedded in our applications. This means that the security standards consumers have in traditional banking apps – authentication OTPs, biometrics, Know Your Customer protocols, and so on – all apply. Banks continuously monitor for fraud, and we are working as an industry to ensure that even when the PayShap limit increases, the proposition will still be secure.”

The original idea was that PayShap would displace cash in the retail space. However, from a corporate perspective, it enables remote and real-time interactions with clients. “The remote aspect opens opportunities that cash doesn’t,” says Stocken. “The more innovative companies are already embedding this capability into their mobile applications.”

In the weeks after its launch, PayShap attracted significant interest and adoption from Absa’s retail customers. Stocken expects a similarly positive response from businesses. “Real-time clearing is already growing five times faster than traditional EFT payments, and PayShap is only going to add to that growth,” he says. “It won’t happen overnight, but once PayShap’s limit moves above the R3 000 level we’ll see the current RTC volumes shift across. Corporates will find more applications for real time payments which will continue to drive high volume growth. That’s what we’re seeing globally, and it’s been our experience since we first launched real-time payments in South Africa in 2006. All of this does point to a very optimistic future for PayShap – and for the consumers and businesses who use it.”

Absa-CIB-Author
Richard Stocken

Head: Cash Management Product, Absa Corporate and Investment Banking.

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