PayShap is a new payment technology available in South Africa that allows anyone to transfer money into someone’s bank account using just a cellphone number.

In order to be paid directly into your bank account, you no longer need to share your banking details with anyone, creating a layer of safety. The payment is instantaneous, showing in your bank account within ten seconds.

PayShap can only be used by someone with a South African bank account. You need to go into your banking app and register a ShapID using your cellphone number. People who don’t have a smartphone will be able to register via USSD, although only Nedbank has already enabled this feature with the other banks offering this shortly.

What is important to understand is that the cellphone number serves as an alias or proxy ID. It has nothing to do with your physical cellphone and the funds are not stored on your cellphone. They are paid directly into your bank account.

The ID could have been your SA ID number for example, or even your name. If your phone is stolen, no one can access the funds.

David Breetzke, Head: Payments Regulatory & Governance at Absa Everyday Banking explains that the cellphone number used as the ShapID must be the one registered with the bank, as this is used to verify the individual, although this process is bank dependent.

This may be a challenge for people who change cellphone numbers, but Mpho Sidaki, head of Real Time Payments at BankServ, says countries like India and Brazil have shown that customers tend to keep one cellphone number for their banking needs.

Ravi Shunmugam, CEO of EFT Product House at FNB explains that you register your cellphone number as your ShapID, and  this is called your Primary ShapID. You can then choose the ID that payers will use to pay into that bank account ‒ this is known as your Account ShapID. This could be your cellphone number, or it could be your cellphone number together with the bank name (i.e. cellphonenumber@FNB). The reason for these two different ShapID’s (Primary and Account) is to cater for people who might have accounts with multiple banks registered for the PayShap service and would like to use a single cellphone number across multiple banks.

A Primary ShapID can only be registered to an account at one bank and would need to be deregistered before registering the same Primary ShapID (i.e. cellphone number) at another bank. Once an FNB/RMB customer registers a cellphone number as a primary ShapID, they will not be able to register the same cellphone number as an Account ShapID.

Take note that once a PayShap transaction has been finalised, it can’t be reversed. When making payment, your banking app will present to you the recipient’s ShapID and “known name”, so be sure to confirm these before you make payment.

If someone has not registered their bank account with a ShapID, you can still make a payment via PayShap using their account number. It will be instantaneous but may attract a fee.

For more information you can visit the PayShap website.

What does it cost to use PayShap?

At this stage only four banks are piloting PayShap, namely Absa, FNB, Nedbank and Standard Bank, but by July the service will be rolled out to other banks including Capitec, TymeBank, Investec, and Discovery.

The four participating banks have all taken a different approach to how they charge their customers for using PayShap. This will be driven by their approach around what payment systems they want to promote.

The banks are charged 50c per transaction by BankservAfrica to clear these transactions. However, Breetzke says each of the banks also has internal costs associated with setting up this new payment service and providing it to their customers.

You should also compare PayShap’s fees to the other payment options offered by your bank to see which is most cost effective for you. For example, most banks provide free or low-cost EFTs if the beneficiary is with the same bank, and these transactions are also processed in real-time. In this case it may be more cost effective to use a regular EFT, although you may still prefer the protection of not using a bank account number.

Nedbank: Nedbank has been very aggressive in its pricing and is offering all PayShap transactions free of charge until the end of April 2023. Thereafter a fee of R1 will apply if you pay to a ShapID. If you pay into an account, there is a fee of R7.50.

FNB: FNB has made all PayShap transactions under R100 free. Thereafter it charges R6 per transaction. This is slightly cheaper than the R7 it charges for an instant payment.

Standard Bank: Standard Bank has a flat fee of R7.50 for every transaction up to R3 000

Absa: Absa charges R2.50 for payments up to R200, R7.50 from R201 to R1 000, and R45 for transactions above R1 000. Absa clearly prefers smaller cash-like payments to be done via PayShap, and expects the majority of PayShap transactions (especially during the initial launch period) to be within this threshold. Breetzke says this will be reviewed based on market forces, customer adoption, and a solid understanding of the risk with this new service. Customers continue to have access to EFTs which are free for bundled customers and are instant when a payment is made to another Absa customer.

This article first appeared in City Press.