SOUTH AFRICA FAST FACTS KEY INSIGHTS DATA DEEP DIVE PRICING OPERATORS CONCLUSION

FAST FACTS


VOLUME OF REMITTANCES
USD 921 million
World Bank, 2020
AVERAGE PRICE OF REMITTANCES TO SEND 200 USD
14.4%
RemitSCOPE Research, 2020
TOP 5 COUNTRIES

VOLUME OF REMITTANCES
921 million USD

World Bank, 2020


AVERAGE PRICE OF REMITTANCES TO SEND 200 USD
14.4%

Remitscope Research, 2020


TOP 5 COUNTRIES


FINANCIAL INCLUSION
69% of adults have an account at a financial institution, incl. mobile money
FINDEX, 2017
NUMBER OF OPERATORS

sending from:
47

Remitscope Research, 2021

FINANCIAL INCLUSION
69% of adults have an account at a financial institution, incl. mobile money

FINDEX, 2017


NUMBER OF OPERATORS

sending from: 27

Remitscope Research, 2021


KEY INSIGHTS

ACCOUNTS AND DIGITAL PAYMENTS

Financial inclusion high, but still cash-based.

89% of adults in South Africa have financial accounts, the majority of which are bank accounts. eWallets by banks are also popular. SA is however still a predominantly cash-based economy. Mobile money has recently been launched again after a failed attempt in 2016, but usage is still low.


Targeting migrant communities, a few of the local money transfer operators (ADLAs) have started to offer store of value accounts (in partnership with banks). Given the high use of cash, most ADLAs have partnered with retail networks for cash-in options.

01

02
DOMESTIC PAYMENT INFRASTRUCTURE

Advanced digital payment system with planned domestic & regional interoperability

South Africa has one of the more advanced payment systems in Africa and is working on an instant payment platform for low-value, high volume transactions. There is no interoperability between different stores of value and many closed loop systems.


SADC has a regional RTGS and is now embarking on a new regional clearing and settlement scheme for low-value retail transactions.


The pay-in network for remittances are well-served by a large physical footprint of bank branches, post office branches, kiosks, roving agents, retail network outlets and ATMs, as well as using technology through USSD and app.


03
LICENSING & REGULATORY ENVIRONMENT

A tiered licencing framework for remittances and strict exchange controls.

South Africa has a tiered licensing framework where there are 4 ADLA licensing categories. Each category stipulates the thresholds on the amounts sent and consumer due-diligence requirements.


South Africa has strict exchange controls that are outlined in the ADLA Manual stipulating that SARB must be in possession of full information regarding every transaction.


ADLA licencing categories are broad enough to include fintech and MMPs. ADLAs are not permitted to do commercial transactions. SARB does not permit ADLAs to net-off settlement between two currencies.

DATA DEEP DIVE



LINK TO KEY REMITTANCE REGULATION

• Currency and Exchange Manual For Authorised Dealers RCurrency and Exchanges Manual for Authorised Dealers.pdf (resbank.co.za)

• Currenrcy and Exchange Manual for Authorised Dealers in foreign exchange and limited authority Currency and Exchanges Manual for ADLAs.pdf (resbank.co.za)

South Africa has specific guidance for Authorized Dealers of Limited Authority (ADLAs) including remittance businesses. Information is available on the different license categories and in the Manual for ADLAs.

LIST OF OPERATORS

Operators Sending Out (47)

Africa Foreign Exchange
Cassava FinTech
HelloPaisa
Kawena Exchange
MamaMoney
Mukuru
Shoprite Money Transfer
Sikhona Forex
Terra Payment Services
Tourvest Financial Services
Tower Bureau de Change
Travelex
WorldRemit
ABSA
African Bank
First Rand Bank
NedBank
Standard Bank
19 AdLAs
Ackermans
Boxer
Checkers
Makro
PEP
PicknPay
Sparkasse
Shoprite
Western Union
MoneyGram
Post Office
MTN - pending

FINAL THOUGHTS

LARGELY INFORMAL MARKET, BUT COMPETITON INTENSIFYING

It is estimated that from South Africa to SADC about 50% of remittances are sent through informal channels. The ADLAs are competing and gaining traction. Payment is still mainly cash via large retail networks, but reduced KYC requirements has increased access. Prices have been coming down as competition intensifies with new fintechs entering the market, including mobile money cross-border due soon.


The regulator is strict and there are strong exchange controls which are a barrier to the use of formal channels. SARB is proactive at improving the market through donors and the ADLA Forum.


There are interesting developments at the regional level. The SADC RTGS is operational, and the Transactions Cleared on an Instant Basis (TCIB) (instant payments regionally) is under development.


South Africa is one of the pilot countries chosen for PRIME Africa. A Diagnostic report on the SA to Ghana, Kenya and Mozambique corridors is available.