On 11 September 2020, the Governor of the South African Reserve Bank (SARB) amended the effective date of the Directive for Conduct within the National Payment System In Respect of Domestic Card Transactions No.1 of 2020 (Directive).

The Directive was published by the SARB on 21 February 2020, providing for the issuing, acquiring and acceptance of cards, as well as for the conduct of card issuers, card acquirers and merchants in respect of card transactions, within South Africa (domestic card transactions).

The Directive recognises that there are currently instances in the market where card transactions are concluded between South African cardholders and South African merchants, but the card issuing and/or acquiring services in relation to such card transactions are provided by entities that are not registered or incorporated in South Africa.

While the transactions themselves occur in South Africa between domestic parties, they are processed by the foreign issuing and/or acquiring entities as if they were cross-border transactions. This conduct is perceived by the SARB as being a circumvention of the South African payments regulatory framework.

According to the Directive, any entity that provides or offers card issuing, acquiring and/or acceptance services used to effect the payment of domestic card transactions falls within the South African payment system regulatory framework. Accordingly, the Directive directs that:

  • All card issuing, acquiring and acceptance services pertaining to domestic card transactions must adhere to the South African regulatory framework.
  • The issuer of a domestic card must be a domestic clearing system participant, and must adhere to the South African regulatory framework. No foreign card issuer may issue a domestic card to be used for domestic card transactions unless it is a domestic clearing system participant.
  • Domestic card transactions must be acquired by a domestic card acquirer, and must adhere to the South African regulatory framework. No foreign acquirer may acquire domestic card transactions nor provide domestic merchants' acquiring services.

The Directive was originally set to come into effect within six months from the date of its publication. This has now been extended to 12 months from date of publication. Accordingly, the Directive is currently anticipated to take effect on 22 February 2021.

To access the Directive, please click here. To access the amendment to the Directive please click here.

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.