South Africa: What The Dickens Is Money?

Last Updated: 14 June 2017
Article by Craig Dewar

"'Papa! What's money?'
Mr Dombey was in a difficulty. He would have liked to give him some explanation involving the terms circulating-medium, currency, depreciation of currency, paper, bullion, rates of exchange, value of precious metals in the market, and so forth; but looking down at the little chair, and seeing what a long way down it was, he answered: 'Gold, and silver, and copper. Guineas, shillings, half-pence. You know what they are?' 'Oh yes, I know what they are,' said Paul. 'I don't mean that, Papa. I mean what's money after all?'"

Dombey and Son, Charles Dickens

In this article, we attempt to answer Paul Dombey's question to his father by providing an overview of the various kinds of "money" (including cash, bank and electronic money, and virtual currency) in the South African context. For present purposes, we attribute to money its widest meaning, namely, any tangible or intangible thing that functions as a means of exchange or debt settlement, a measure of value, a unit of account or as a store of value.

Money, in its simplest form, is cash or currency that (subject to its meeting certain criteria set out in the South African Reserve Bank Act, 1989) constitutes "legal tender", namely, physical coins or notes issued by the South African Reserve Bank ("SARB") that must (if tendered) be accepted by a creditor in discharge of a debt. Payment in cash entails the physical transfer of the coins or notes from the payer to the payee, coupled with the intention of the payer to transfer his or her ownership therein.

Intangible money (or "bank money"), in essence, constitutes a credit against an asset account held at a bank, convertible into cash or currency by the bank on demand. Although bank money does not constitute legal tender, it is the most commonly used (and convenient and secure) form of payment, particularly for large transactions. Payment is initiated by way of a payment instruction, which is then cleared and settled among participant banks in the national payment system, each of whom hold an account at the SARB. This entails a series of debits and credits, ultimately resulting in a debit to the bank account of the payer and a credit to the bank account of the payee. The payer does not cede or transfer his or her claim against the bank to the payee; rather, the payer's claim is extinguished or reduced, and the payee's claim is created or increased in exchange. If the payer and payee hold accounts at separate banks, corresponding debits and credits occur between the two banks.

A variant of bank money is electronic money or "e-money". In its Position Paper on Electronic Money, the SARB defines electronic money as follows:

"Monetary value represented by a claim on the issuer. This money is stored electronically and issued on receipt of funds, is generally accepted as a means of payment by persons other than the issuer and is redeemable for physical cash or a deposit into a bank account on demand."

Forms of electronic money include the monetary value used to execute payment transactions over the internet or mobile phones, as well as that stored on certain pre-paid instruments. Electronic money is distinguishable from the following, among others:

  • a credit card with an embedded credit facility (in that a credit card is not issued on receipt of funds);
  • pre-paid cards that are not generally accepted as a means of payment; that is, they can be used to acquire goods or services only in or on the issuer's premises or under a commercial agreement with the issuer, either within a limited network of service providers or a limited range of goods or services; and
  • subject to certain exceptions, pre-paid cards that have a monetary value irredeemable for physical cash or for a deposit into a bank account on demand.

In South Africa, only a registered bank (as defined in the Banks Act, 1990) may issue electronic money. An example of electronic money is the monetary value "loaded" on a pre-paid smart or chip card. For a non-bank commercial entity wishing to offer such a card to its customers, it must first be "sponsored" by a registered bank, which grants it the right to receive and advertise for deposits as agent on the bank's behalf. The bank issues the card, bearing the entity's brand on its face and on the back, the words "operated by [entity name] under the banking licence of [name of bank]" or words to this effect. Customer funds received by the entity may be held in a pooled account at the bank in the name of the bank, with various virtual sub-accounts or "e-wallets" for each cardholder. Payment is effected by way of debits and credits, either closed- or open-loop, depending on where the payee's account is held, or whether the payee has an e-wallet with the entity.

Another kind of money is virtual or digital currency, examples of which include Bitcoin, Ripple, Tether, Ethereum, and WingCash. There is no universal definition or taxonomy of "virtual currency", nor is there consensus on whether it constitutes "money" and whether (or to what extent) it should be regulated.

In its Position Paper on Virtual Currencies, the SARB defines a virtual currency as "a digital representation of value that can be digitally traded and functions as a medium of exchange, a unit of account and/or a store of value, but does not have legal tender status."

Other definitions include the following:

  • the European Central Bank: "a digital representation of value, not issued by a central bank, credit institution [ie bank] or e-money institution, which in some circumstances, can be used as an alternative to money".
  • the International Monetary Fund: "digital representations of value issued by private developers and denominated in their own unit of account".

Most virtual currencies are privately issued, although a number of central banks (including the SARB) have expressed an interest in the development of a national virtual currency. Virtual currencies may be centralised or decentralised, convertible or inconvertible (into real currency), self-anchored or in a claim-check format. So far as virtual currency is not redeemable against an issuer, it is not seen as deposit-taking under banking legislation, and is also unlike electronic money.

Reviewed by Angela Itzikowitz, an executive in ENSafrica's banking and finance department.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions