Mobile payment services are typically the transfer of funds or payments using mobile devices that do not rely on traditional banking or payment services. Customers use an “open-loop” system to spend the value they have deposited into their mobile money account at service providers, transfer it to someone else or withdraw the value as cash using their mobile device not linked to a current bank account or credit card.
Despite the increase in mobile payment services globally, the terms “mobile money” and/or “mobile payment services” are not specifically regulated in any piece of South African legislation. However, the acceptance of deposits from the general public by a person (natural or juristic) is regulated by the Banks Act
Section 11 provides that only a registered bank may conduct the business of a bank. The business of a bank includes the acceptance of deposits as well as the soliciting of or advertising for deposits from the general public as a regular feature of business.
The payment of funds by a customer into a mobile money account would constitute a deposit in contravention of the Banks Act because the “open-loop” system allows the depositor to withdraw the deposit or any remaining funds, on demand.
The South African Reserve Bank also has the regulatory and supervisory power under the National Payment System Act, 1998 (NPS Act) to manage and control payment system risk.
Although not specifically referred to as “mobile money”, the Reserve Bank has given its stance on the concept of electronic money in a position paper on e-money published in 2009. E-money is the monetary value represented by a claim on the issuer. This money is stored electronically and is generally accepted as a means of payment by others and is redeemable by the customer on demand for physical cash or as a deposit into a bank account. Only registered South African banks can issue e-money.
It is possible for a non-bank to enter into arrangements with a bank to allow them to offer payment-related services in conjunction with the bank. However, approval of the Registrar of Banks is required for such a joint venture.