How South Africa is gearing up for PayShap Request (RTP)

In South Africa, RTP, also known as PayShap Request, is the latest offering from PayShap, the real-time payments system built by BankServ. Since its launch in 2023, PayShap has processed over 30 million transactions. Next week, the scheme will officially introduce PayShap Request, which will “allow individuals, businesses and even informal traders to send a request for immediate payment”. The hope is that RTP will drive greater adoption of PayShap by supporting person-to-merchant (P2B) payments, as well as person-to-person (P2P) payments.

The first bank to announce a new solution based on this offering is Standard Bank, who recently unveiled its PayShap Request for Corporates platform.

What is PayShap Request, or RTP?

Request to Pay (RTP) enables one party to request payment from another party, with the payee required to confirm the request and authorise the payment. PayShap Request aims to streamline the process of sending and receiving payments across banks by enabling the payer to respond to payment requests in real time.

How it works

PayShap requests are sent in real-time, and once approved, get paid instantly. To participate, customers must bank with one of the institutions in the initial cohort and register a ShapID. To pay on a merchant site that offers RTP, the customer simply enters their ShapID and authenticates the payment via their bank.

Banks participating in the first cohort include African Bank, Capitec, Discovery Bank, First National Bank, Investec, Nedbank, Standard Bank and TymeBank.

Why is PayShap Request important for the market?

As demand for instant, digital payments increases, traditional payment methods like card payments and manual EFT, which take longer to settle, are losing popularity. PayShap Request mitigates the uncertainty of delayed payments, including the additional costs accompanied with failed payments, disputes and fraud. 

What are the benefits?

For consumers:

• Flexibility and control
  Consumers can choose to accept, decline or partially pay for a service, providing more flexibility and control than other payment methods.  

• ‍Enhanced security
  Secure bank channels are used to facilitate the request and authenticate the payment, reducing the risk of fraud.

For merchants:

• Lower transaction costs
  PayShap Request leverages account-to-account payments, which means merchants can avoid card transaction fees.‍

• ‍Enhanced security
  Real-time payment confirmation reduces card-not-present (CNP) fraud.

• Optimised cash flow management
  Instant payments ensure that businesses receive funds immediately. This improves cash flow and enables more accurate financial forecasting to manage operations more efficiently. 

• Optimised cash flow management
  Instant payments ensure that businesses receive funds immediately. This improves cash flow and enables more accurate financial forecasting to manage operations more efficiently. 

• Decreased chargebacks
  Payments are authorised by the customer directly from their banking app, reducing the likelihood of disputed transactions and dispute charges.

For the government:

• Enhanced anti-money laundering (AML) controls
  Full payment details are included in every transaction, improving financial transparency.

• ‍Improved public services
  PayShap Request can be integrated into payments for public services to make it easier for citizens to pay for fines, utilities and taxes. 

• ‍Reduced cost of cash
  Lower reliance on cash cuts operational costs of managing physical cash in the system.

RTP systems around the world

The adoption of RTP varies significantly across the globe. Emerging economies have seen greater success in implementing instant payment systems that support widespread RTP usage. In contrast, markets in Europe, including the UK and the European Union, have experienced slower uptake among both merchants and consumers. Key barriers include infrastructure costs, challenges in achieving seamless interoperability, insufficient consumer education and a lack of strong incentives for merchants to adopt RTP as a payment initiation method.

On the other hand, countries like Brazil and India have taken proactive measures to incentivize merchant adoption of RTP. Their success is also bolstered by the interoperability of their instant payment systems, making it easier for participants to offer the service on a larger scale.

BRICS Powerhouses

Brazil – PIX request to pay

Brazil launched PIX instant payments in 2020. It has over 100 million registered accounts and 850 registered participants including non-banks. Participation is mandated for institutions with more than 500,000 active users.

The scheme uses QR codes to enable RTP P2M payments. According to the International Monetary Fund (IMF), P2M payments average 30% of total PIX monthly transactions.

India – Collect Payments

India launched its faster payments system, the United Payments Interface (UPI), in 2016. It has 622 live members, including 77 payment service providers (PSPs) to date. 

In the past year, UPI P2M volumes grew by 68%. The growth is mirrored by a 39% increase in UPI QR code transactions which reached 340 million since January 2023. 

Slower Adoption in Europe

SEPA Request to Pay (SRTP)

Rolled out in  2021, the adoption of SRTP (Secure Request to Pay) within the European Union (EU) has been limited, despite the widespread availability of SEPA Instant. SEPA Instant is accessible across 32 countries through more than 2,000 service providers, yet SRTP has only three registered participants as of October 2024.

UK – Request to Pay (RTP)

The UK’s Faster Payment System (FPS) processed 4.5 billion transactions and currently has 45 live participants. 

RTP was implemented in 2020; however, like SRTP, it is not widely adopted in the market.

Does PayShap Request have potential to drive PayShap adoption?

South Africa’s payments landscape does share similarities with India and Brazil’s, prior to their successful implementation of instant payments. So there is reason to be optimistic about the success of PayShap as the adoption curve continues to tick upwards. 

Participation in PayShap is not mandatory; however, and thus far, only eight out of 34 banks registered with the Payments Association of South Africa (PASA) have confirmed participation in the first PayShap Request cohort. However, solutions driven by PSPs like Stitch, such as Pay by bank, are positioned to utilise RTP and enable further innovation on top of this rail. 

Additionally, our payments ecosystem survey revealed that 52% of South Africans used digital tap-to-pay platforms last year. However, despite the growing demand for contactless payments, many lower-end phones in the market lack NFC capability. This creates an opportunity for QR code payments and therefore RTP-led P2M transactions. Use cases include:

• Bills and utilities
  Telecom providers like Vodacom and Telkom, as well as broadcasting services like DStv, can streamline collections and manage arrears by pushing PayShap requests through digital channels, including mobile apps.‍

• Retail
  According to the National Credit Regulator (NCR), retailers account for over 7% of total credit granted in South Africa. Retailers that offer consumer credit, such as clothing accounts at Edgars or Cotton On, could use PayShap Request to initiate payment requests and manage payments more efficiently. 

• E-commerce
  Online merchants can reduce chargebacks and failed transactions by incorporating PayShap Request and Pay by Bank payment methods into their payment gateways. In addition to one-off payments, Buy Now Pay Later (BNPL) providers like Payflex and Happy Pay can leverage PayShap Request to send recurring payment reminders, ensuring smoother transactions.

• Government and state-owned institutions
  Municipalities can better manage accounts in arrears by digitally requesting payments from account holders and replacing physical notices. Similarly, SARS e-filing can utilise PayShap Request for tax payments and related penalties after sending digital notices to taxpayers.

The role of payments service providers like Stitch

A key factor in the success of Pix in Brazil and UPI in India is the active involvement of payment service providers (PSPs) and non-banks in the instant payment system and its value-added services. As the payments landscape in South Africa continues to evolve, PSPs will play a crucial role in driving the adoption of payment innovations like PayShap Request.

Stitch is preparing to support enterprise merchants by offering a comprehensive suite of performance-driven services designed to navigate, orchestrate and optimise payments. We lead the way in Pay by bank solutions in South Africa, and are collaborating with the market’s leading banks that will be critical to bringing PayShap Request to life.

Get in touch with us to learn more about how we empower enterprise merchants to stay at the forefront of the evolution in bank-to-bank payments in South Africa.