South African banks will soon discontinue the EFT payment system with neighbouring Namibia, Lesotho and Eswatini. Picture: rus-burkhanov / pixabay
South African banks are set to discontinue electronic funds transfers (EFT) between South Africa and neighbouring countries Lesotho, Namibia and Eswatini.
IOL reached out to several banks to find out what the reasons for this regulatory decision may be.
Standard Bank said there has been growing concern among Common Monetary Area (CMA) regulators that low value payments and collections across the region need to be processed as fully fledged cross-border transactions and subjected to full cross-border monitoring and regulation adherence.
The CMA is a monetary union which links South Africa, Namibia, Lesotho and Eswatini. While each of these sovereign nations issues its own currency, all four currencies are governed by the South African Reserve Bank and are valued and exchanged on par with the South African rand.
“Due to the regulatory changes and the compliance issues, the domestic electronic funds service (EFT), currently in use, is considered to be inappropriate, and hence will be decommissioned in the CMA in September 2024,” said Standard Bank.
The final day for processing domestic EFTs, including credit payments and EFT debit collections, to and from Namibia, is September 30, while for Eswatini and Lesotho, it is September 9, 2024.
This decision will also have an impact on businesses that use EFT as their online payment system, including for debit order collections.
Standard Bank said that this will see corporations with multinational interests having to adopt replacement services for their transactions or using the cross-border service to bulk fund transactions, for example; between South Africa to Namibia, and processing local transactions for their payment or collections needs in-country.
To make this change less disruptive to consumers, several banks, including Standard Bank, are currently busy implementing alternative cross-border payment methods and supporting business and corporate clients to localise their banking arrangements where required or chosen.
IOL