South African banks have long relied on a legal barricade that keeps telecom operators out of the deposit‑taking business, but recent moves by the Reserve Bank suggest that the wall separating payments‑infrastructure from the banking layer is beginning to shift. The Banks Act of 1990 forces mobile giants such as Vodacom and MTN to partner with licensed banks for every financial service they launch, meaning platforms like MoMo and VodaPay still need a bank to settle each rand that flows through their apps.
The dual‑front convergence war – operators expanding into payments while banks dip their toes into connectivity – has highlighted a stark asymmetry. Mobile operators own the phone numbers and data bundles; banks own the settlement system and the right to hold deposits. This mismatch has translated into higher wholesale costs for banks each time a customer opens a banking app, while operators cannot match the pricing power that comes from controlling the network.
What many observers missed is the other side of the equation: the regulatory framework that prevents operators from progressing beyond the payments layer. The Banks Act bars any non‑bank from accepting public deposits without Reserve Bank approval, a hurdle that demands strict capital, governance and risk‑management standards that telecoms simply do not possess. Consequently, Vodacom’s ill‑fated M‑Pesa venture had to run through Nedbank, then Bidvest, before being scrapped in 2016, while MTN’s MoMo still clears through African Bank.
The regulatory wall and its slow erosion
The Reserve Bank has been quietly reshaping the national payments landscape since 2018, aiming to give non‑banks limited access to the payment‑clearing infrastructure. Draft proposals released in March 2025 outlined which activities could be performed without a banking licence, and a public consultation ran until April 2025. After several delays, a revised set of proposals was published in June 2026, with stakeholder comments due by 15 June and a final framework expected in the third quarter of 2026. The pivotal National Payment System Bill has yet to be tabled in Parliament, but the regulator now envisions a multi‑year modernisation programme under its Vision 2030+ plan.
| Milestone | Date | Key Outcome |
|---|---|---|
| Initial draft released | March 2025 | Defined non‑bank payment activities; opened consultation |
| First public comment deadline | April 2025 | Collected industry feedback |
| Revised proposals published | June 2026 | Updated scope; extended comment period to 15 June |
| Final framework expected | Q3 2026 | Full regulatory text ready for parliamentary debate |
| National Payment System Bill introduction | Late 2026 (projected) | Legislation to enable reforms |
| Potential enactment | 2027 | Timeline for phased implementation |
The table shows that while the reform process has slipped, the trajectory remains upward – the regulator is steadily moving toward a framework that will let operators process payments without a bank intermediary.
What the reform will not deliver is a licence to take deposits. Operators will gain independence in the payments layer, but the core banking relationship – the ability to hold customer funds, assess credit risk and earn interest on deposits – stays firmly in the banks’ domain. This distinction underpins why banks continue to hold a strategic advantage despite the growing sophistication of telecom‑run wallets and money‑transfer services.
Payments‑layer access versus deposit‑taking power
When MoMo or VodaPay can settle transactions directly on the national payments system, they will no longer need to route each payment through a partner bank. The operational benefit is clear: lower wholesale costs, faster settlement and greater control over the user experience. However, the operators will still not see the full picture of a customer’s financial health. Banks retain visibility into savings balances, credit utilisation and debt‑service capacity, data that underpins risk‑based lending and cross‑selling opportunities.
In practical terms, the reform creates a two‑tiered architecture:
- Tier 1 – Payments layer – Open to non‑banks; enables direct transaction processing.
- Tier 2 – Deposit relationship – Reserved for licensed banks; includes deposit‑taking, credit assessment and full balance‑sheet oversight.
The two tiers remain loosely coupled; operators can build richer transaction histories but cannot replace the depth of insight a bank gains from holding the underlying deposits.
Why the wall still matters
Banks’ dominance in the deposit space translates into a steady stream of low‑cost funding, which they can redeploy into loans and other income‑generating activities. This funding advantage is reinforced by Basel III capital requirements, which compel banks to maintain risk‑based capital buffers – a cost that telecoms would struggle to absorb without compromising shareholder returns.
Moreover, the switching costs for consumers remain high. A customer who has linked their salary account, credit facilities and savings products to a bank faces friction when moving to a pure‑payments provider. Even if an operator can process payments independently, the loss of a holistic banking relationship may deter churn.
The narrowing window for change
The regulatory tide is turning, but the window for operators to capitalise on a more open payments ecosystem is finite. As the National Payment System Bill inches closer to parliamentary consideration, telecoms must position themselves to leverage direct settlement while recognising that the deposit layer will likely stay out of reach for the foreseeable future.
If the Reserve Bank’s reforms materialise as scheduled, the next few years could see a more level playing field in the payments arena, prompting banks to innovate around their deposit advantage and forcing operators to deepen value‑added services – such as real‑time analytics, loyalty integration and bundled data‑payment bundles – to retain customers.
For now, the bank‑operator convergence remains a contest of breadth versus depth: operators push the frontiers of connectivity and transaction speed, while banks safeguard the deep, data‑rich relationships that stem from holding deposits. The outcome will shape South Africa’s digital finance landscape for a decade to come.