Payments Views


How to Get Along and Do Good

Recently I shared my views about the developments underway in the mobile and payments space in Latin America. In that story, I address how individual countries are taking big strides toward reshaping their national payments landscape.

Another remarkable, and equally little known, story is happening in southern Africa where the payments infrastructure in 15 countries is being updated and aligned for future growth, especially to drive intraregional trade. All of this is being coordinated by the Southern African Development Community (SADC), an inter-governmental body with an ambitious, shared agenda to “achieve economic development, peace and security, and growth, alleviate poverty, enhance the standard and quality of life of the peoples of Southern Africa, and support the socially disadvantaged through Regional Integration.”

An agenda that big encompasses a lot and regional payments improvements is one important area of focus. I had the good fortune of spending some time recently with the folks making all this happen.

Building on a new base of real time gross settlement (RTGS) systems in most countries (efforts supported by the World Bank), the central bank governors in the SADC countries agreed back in 2009 to deploy the additional infrastructures needed to easily exchange bank to bank payments among the SADC countries. These systems have become a regional inter-bank settlement system and a regional clearing capability for EFT credits and debits.

How does it work? The inter-bank settlement system (SIRESS for short) is a Closed User Group in SWIFT, administered by one of the members. These are bank to bank transfers with a copy of every settlement message sent to SIRESS. The first SIRESS users went live in July 2013.

Next, the initial users of the EFT credit framework will come on line. Here things will get more interesting:

First, you don’t have to use a specific bank or channel. The bank participants can use commercial entities like clearinghouses that meet the technical standards required to exchange EFTs. The first clearinghouse to qualify is Bankserv in South Africa. This is exciting because payment aggregators play a fundamental role in lowering overall costs and can, as the market matures, offer additional value added services.

If retail payment infrastructures makes you yawn (what?! not as exciting as an HCE-based bank payments app or the speculation over the mysterious Satoshi Nakamoto?), well, then, Wait! I have antidotes for that condition.

First, consider the enormous accomplishment here. To create these systems, SADC member countries had to reach agreement on the ISO 20022 standards to exchange payments as well as on the scheme rules. That means that 15 member states (Angola, Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe, countries that span the range from low to upper middle income with a combined population of nearly 286 million) had to come together, discuss, debate, reach agreement, and implement. And they did it all within a few short years.  Oh, and nobody told them they had to do this. They just did it on their own in order to bring all the countries in the region up to a common standard.

Certainly there are areas that can be enhanced in the future. How about allowing non-bank providers to participate in order to make the ecosystem more competitive? How can these accomplishments help bring financial services to the huge share of the population that still lacks them? These are important elements in the region’s economic development.

The second thing that will suppress payment infrastructure-induced yawns is, well, take a look at the magnificent creatures below that I had the good fortune to visit in the Pilansberg National Park in South Africa. Simply breathtaking!



This article was written by Glenbrook’s Elizabeth McQuerry.