Abstract
This dissertation delves into the historical roots and developments surrounding financial inclusion in South Africa, with a particular focus on the payment system. It highlights the South African government and financial industry's continuous efforts to foster financial inclusion, addressing challenges faced by both individuals and SMMEs. Key regulatory frameworks such as the Twin Peaks and the Financial Inclusion Policy by the National Treasury, underscore the commitment to expanding access to the formal financial sector.
In respect of the National Payment System ("NPS”), the collaborative efforts between the banking industry and the government are examined, tracing its evolution from the Blue Book of 2004 to Vision 2025. The payments legal frameworks have evolved to allow non-banks, particularly fintechs, to participate in the payment system, contributing to innovative payment solutions. However, challenges persist, prompting ongoing initiatives to promote financial inclusion within the NPS. The proposed amendments to the National Payment System Act 78 of 1998 (“NPSA”) are scrutinised for their potential impact on both banks and non-banks, stressing the importance of flexibility to balance financial stability and inclusion.
The study explores historical initiatives, such as Exemption 17 which facilitated the introduction of Mzansi accounts but highlights current obstacles related to customer onboarding due to the Financial Intelligence Centre Act 38 of 2001 identification requirements. Thus, recommendations are made by the study for a re-evaluation of these requirements considering the challenges faced by low-income segments, involving collaboration with the Department of Home Affairs (“DHA”).
This dissertation concludes by highlighting the crucial role of consumer financial education, proposing its elevation to a core function in the NPSA alongside financial inclusion within the NPS. A holistic overview is recommended in achieving effective and sustainable financial inclusion, by recognising consumers and the government (like the DHA) as pivotal stakeholders to the operational functioning of the NPS in achieving financial inclusion.