TymeBank, Capitec and Discovery Bank have now joined Absa, FNB, Nedbank and Standard Bank as part of the PayShap payment system which allows for instant payments between bank accounts.

PayShap, the brand name for the Rapid Payment Programme, is a new payment rail that the South African banking industry has been working on over the last five years. This system will reduce the cost and improve the speed at which banking transactions take place.

While banks have previously offered instant transfers using the RealTime Clearing system, these are not truly instantaneous and tend to be quite expensive.

With PayShap, funds are transferred within ten seconds. The system is less expensive to run and allows for the use of a ProxyID rather than a bank account number, improving customer safety.

The introduction of PayShap has largely reduced the cost of instant payments across all banks for low-value transactions.

What will instant payments now cost?

The Capitec fee for conventional instant payments was R7.50, however with PayShap, that fee will be zero for transactions under R100. For transactions from R100 to R1000 the fee will be R1.50, and it will cost R3 for transactions from R1000 to R3000.

TymeBank is offering the service to its customers for free regardless of transaction value.

Nedbank charges a flat rate of R1 irrespective of the transaction value, and Standard Bank’s flat fee is R7.50. The other banks have a tiered pricing structure.

FNB charges nothing for transactions up to R100, and for amounts over R100, it’s R6 per transaction.

Absa charges R2.50 for transactions up to R200, and R7.50 for transactions over R200.

According to Discovery Bank it was the the biggest user of PayShap rails within its first week of launch ‒ more than the rest of the local banking industry combined. This is because Discovery fully integrated PayShap into its payment system and does not differentiate between costs for different real-time payment infrastructures.

In other words, if a customer wishes to do a real-time transaction for an amount under R3000, they will automatically use the PayShap payment rail without having to select it as an option.

Discovery Bank clients pay R1 to transfer funds up to R100, R5 for amounts between R100 and R1500, and for amounts above R1500, it’s 0.4% of the transaction amount, capped at R30.

Exponential growth is expected

According to BankservAfrica, between the PayShap launch in March and the end of July, over 800 000 transactions were recorded with a settlement value in excess of R660 million. Over 300 000 ShapIDs have been registered.

This is, however, miniscule in terms of the 21 million electronic payments done in South Africa each month of which around 73% are under the value of R3000.

BankservAfrica executive Mpho Sadiki says it takes time for a new technology to be adopted and this has been the experience of the introduction of the Rapid Payment Programme globally.

Sadiki says it took Singapore a year to reach a million transactions, yet PayShap is on target to reach that figure by the end of August. The payment system should grow exponentially once more banks join the payment system.

Capitec will be a significant player in this space as many of its customers make use of instant payments, especially for payments to family.

In the last year Capitec clients made over 645 million electronic payments with around 80% for values under R3000 which is the maximum threshold for PayShap transactions.

This article first appeared in City Press.