Abstract
Technological advancements throughout the world have been transforming the
financial sector, specifically the payment systems. A technological innovation, such as
Blockchain Technology can have far reaching implications for the country’s banking
system and the role of the central bank. Blockchain Technology promises to
significantly transform the payment processing landscape, ranging from payments,
clearing and settlement processes. Therefore, this study aims to evaluate the impact
of Blockchain Technology on the South African banking sector, specifically relating to
the clearing and settlement of payments. It specifically investigates, whether
blockchain can be used to clear and settle payments, and analyse how it has been
perceived by the banking community, thus far. Blockchain refers to a decentralised
network for managing transactions, which eliminates a central authority.
Currently Blockchain Technology is a major area of interest within the banking sector,
specifically payments, because of its unique decentralised nature and benefits. As a
result, interest in the technology and its benefits remain on an upward trend amongst
central banks and the financial services sector. To achieve the research objective, this
study followed desktop research and qualitative methods that consisted of analysing
journals and published reports.
The literature review on payment systems and Blockchain Technology was explored
and significant findings were produced. Blockchain Technology was found to be in its
infancy phase in the South African banking payment industry. Although, the majority
of the retail banks in South Africa perceive Blockchain Technology in a positive light, it
was found that its adoption could face numerous challenges emanating from
governance, regulation, and interoperability.
Key words: Blockchain Technology, distributed ledger technology, payment systems