Booking an Uber ride, subscribing to Netflix, or buying an item from an overseas online retailer probably doesn’t feel like an international financial transaction. But according to the South African Reserve Bank, some payments can end up being processed as cross-border transactions because of the way the payment chain is structured.
That’s one of the issues the central bank is trying to address through two draft regulatory proposals that would introduce South Africa’s first dedicated framework for cross-border payment facilitators – entities that help overseas merchants accept payments from South African customers through partnerships with local financial institutions.
The proposals also seek to close regulatory gaps that have emerged as new payment models have evolved, including situations where transactions that are economically domestic are processed as international payments.
Although the proposals are aimed primarily at banks, payment providers, and fintech businesses, they could also affect consumers by improving oversight of rapidly evolving payment models and reducing circumstances in which domestic transactions attract unnecessary international transaction fees.
For financial institutions and payment providers, however, the proposals represent a significant expansion of the SARB’ oversight of an increasingly important part of South Africa’s payments ecosystem.
Why is the SARB concerned?
The SARB says two developments prompted the new proposals.
The first is the emergence of new cross-border payment models.
In its media statement, the central bank notes that payment facilitators now aggregate payment transactions in South Africa on behalf of offshore merchants selling goods and services, including digital products. Although these businesses operate through sponsorship arrangements with local financial institutions, they are not currently regulated in South Africa.
The second concern is the increasing misclassification of some domestic transactions as cross-border payments.
According to the draft directive, this can happen when the financial institutions issuing or acquiring the payment are located outside South Africa, even though the underlying economic activity takes place locally. The draft cites examples such as domestic e-hailing services, accommodation, and travel cards used for purchases within South Africa.
Think of someone booking accommodation in Cape Town through an international online platform or paying for a ride using an app whose payment infrastructure is based offshore. Although the service itself is provided in South Africa, the payment may be processed as a cross-border transaction because of how the payment chain is structured.
According to the SARB, this has several consequences. It can weaken regulatory oversight, create opportunities for regulatory arbitrage, reduce transparency in the payment chain, and result in consumers paying international transaction fees for purchases that are, in substance, domestic.
What kinds of payments are affected?
The proposals do not affect ordinary card purchases at local retailers.
Instead, they focus on payments involving offshore merchants or international payment structures.
Examples are:
- subscriptions to international digital services such as Netflix, Spotify, or Microsoft 365;
- purchases from overseas online retailers such as Amazon or Temu;
- payments to international software providers;
- accommodation booked through international platforms; and
- certain e-hailing transactions where the payment is processed through offshore payment infrastructure.
For most consumers, nothing about the way they pay will change immediately. The proposals are aimed at the businesses operating behind the scenes rather than the customers making the payments.
If ultimately adopted, the directive will only come into effect six months after publication to allow participants time to prepare for the new requirements.
Two documents, one regulatory framework
Although released together, the two draft documents serve different purposes.
The first, issued by the SARB’s National Payment System Department (NPSD), deals with how these payments should operate within South Africa’s national payment system. It establishes the regulatory framework for cross-border payment facilitators, clarifies who may issue and acquire payment instructions, and sets out the responsibilities of the financial institutions involved.
The second document, published by the Financial Surveillance Department (FinSurv), addresses the foreign exchange and reporting aspects of the same transactions. It proposes amendments to the Currency and Exchanges Manual for Authorised Dealers and introduces operational requirements for payment aggregators – businesses that consolidate multiple customer payments before transferring the funds to an international merchant.
The SARB says the two documents form part of a co-ordinated regulatory approach and will be finalised and published simultaneously.
What would change?
The most significant proposal is that cross-border payment facilitators would, for the first time, operate within a clearly defined regulatory framework.
Rather than functioning outside a dedicated regulatory regime, they would be permitted to operate through sponsorship arrangements with a domestic acquirer – a South African financial institution authorised to accept and process payment instructions on behalf of merchants. The sponsoring acquirer would remain responsible for settlement, regulatory compliance, and oversight of the payment facilitator’s activities.
The draft directive also makes it clear that this approach could evolve over time. If payment facilitators become sufficiently large or systemically important, the SARB may in future require them to obtain direct authorisation as domestic acquirers rather than continuing to operate under sponsorship arrangements.
Another key proposal is that domestic payment instruments should be issued by domestic issuers and that domestic payment instructions should generally be acquired by domestic acquirers. Foreign institutions would therefore not be permitted to issue domestic payment instruments or acquire domestic payment instructions unless they are also authorised as domestic participants.
The objective, according to the SARB, is to ensure that payments for goods and services provided in South Africa remain within the country’s payment system while still allowing legitimate cross-border commerce to continue.
New operational requirements
The second draft document, issued by FinSurv, sets out the operational rules that would underpin the new framework.
Under the proposal, payment aggregators would not be allowed to operate independently. Instead, they would have to partner with an Authorised Dealer – typically a bank authorised by the SARB to deal in foreign exchange and administer South Africa’s exchange control requirements. The Authorised Dealer would remain responsible for ensuring that transactions comply with the Exchange Control Regulations and associated reporting requirements.
Before entering such a partnership, the Authorised Dealer would have to obtain written approval from FinSurv. Applications would need to demonstrate that appropriate due diligence, governance, risk management and client fund safeguards are in place. Similarly, domestic acquirers seeking to sponsor cross-border payment facilitators under the NPSD framework would have to obtain prior approval from the SARB.
The proposals also introduce a range of operational requirements designed to improve transparency and oversight. Payment aggregators would be required to collect and verify customer information, maintain complete records of transactions, provide a full audit trail, and make information available to their banking partners for regulatory reporting. They would not be permitted to conduct foreign exchange transactions in their own right or hold foreign currency on behalf of clients.
Transaction limits and consumer protection
The draft circular also proposes a transaction limit for retail e-commerce payments processed under the new framework.
Resident individuals would be able to make purchases from international merchants of up to R50 000 per transaction, whether for imported goods or subscription services. The proposal also makes it clear that transactions may not be split into smaller amounts to circumvent the limit.
Alongside the new regulatory requirements, the NPSD directive introduces measures aimed at strengthening consumer protection. Domestic acquirers would be expected to ensure greater transparency around fees and exchange rates, provide appropriate dispute resolution and chargeback mechanisms, maintain complaint-handling procedures, and ensure the fair treatment of customers.
Although consumers are unlikely to notice any immediate change in the way they make payments, the SARB says the proposals are intended to improve oversight of increasingly complex payment models while allowing innovation and competition to continue within a clearer regulatory framework.
What happens next?
The SARB has invited stakeholders to comment on the proposed Directive for conduct within the national payment system in respect of issuing and acquiring payments for goods and services provided by offshore merchants by 17 July 2026.
The accompanying “Draft Exchange Control Circular: Cross-border retail e-commerce regulatory framework” was released for public consultation in December 2025. According to the SARB, the FinSurv is reviewing the comments received.
As a result, the current consultation relates only to the NPSD draft directive. However, the SARB has indicated that the directive and the FinSurv circular form part of a co-ordinated regulatory framework and will be finalised and published simultaneously.
The draft documents are available on the SARB website:
Comments on the draft directive should be submitted to NPSDirectives@resbank.co.za.
