Ep 135: The Case for Cheaper, More Open Payments - Lincoln Mali

Michael Avery (0:00)

Welcome to The Monocle Banking Podcast, as always curated by Monocle Solutions. Now, almost two years ago, Lincoln Mali sat in this chair, metaphorically at least, and told me that Africa's payment system was ripe for disruption. At the time, ASAP, or the Association of Payment Providers had just been launched, and Lincoln identified three fundamental problems, access, cost and competition. Non-bank payment companies still depended on banks to access critical parts of the payment system. Wholesale payment costs remained too high, and in his words, the competitive environment was still geared more towards protecting incumbents than enabling challenges. But he also told me something else. He said the Reserve Bank was contemplating precisely reforms that could begin dismantling those barriers, activity-based regulation, greater participation by non-banks, a national payments utility, and ultimately the possibility that properly regulated payment companies could clear and settle without needing a sponsoring bank.

Almost two years later, we are no longer talking entirely about policy intentions, passes all payment system management functions have migrated to the Reserve Bank and PayInc. We see the architecture around PayInc changing. The national payment system framework itself is being rewritten. ASAP's interchange work is feeding into the SAAB's determination processes, and ASAP has put an actual proposal on the table for turning PayShap into a much more practical merchant payment proposition. So Lincoln Mali, CEO of Lesaka Technologies and re-elected president of the Association of South African Payment Providers. Welcome back to The Monocle Banking Podcast. I can't believe it's been almost two years.

Lincoln Mali (1:56)

Oh Michael, thank you so much.

Michael Avery (1:58)

A lot has happened. I mean, I went back and I listened to our conversation from January of 2025, and you told me that ASAP's true competition wasn't actually the banks. You said our true competition is inefficiency, our true competition is a lack of access and a lack of inclusion. 20 months later, how would you say we've fed on those three? Where have you seen the dial genuinely shift and where has it remained stuck?

Lincoln Mali (2:24)

Yeah, Michael, thank you so much. I think we were reflecting as the ASAP team as we reviewed the two years.

And we are disappointed that we haven't made a lot of traction in the actual changes that need to take place.

And the three areas of disappointment would be the direct participation. The Reserve Bank itself has indicated that possibly in November, they will be ready to announce the changes. We had thought by now we would see those changes, but we remain hopeful that those changes will be announced. The second thing that we disappointed with is that the work on interchange and bringing the cost of transactions, particularly for small businesses and low-end customers, should come down. And that work is being done at the Reserve Bank, but we have not seen what the new policy position would look like. And the third one is PayShap. We think PayShap has made a lot of progress, yet it's still not the day-to-day de facto payment method in society. The things that I think are positives, the following ones. One, we've seen a change in the creation of PayInk. I think that that is a lot of work, and it's a lot of collaboration to get that model to work. And I think the regulators have been commended for the work they've done to get PayInk off the ground in a very short space of time, relatively.

Secondly, I think they have to be commended for the collaborative and consultative nature in which we have a sense that we are being listened to and being heard. Of course, the final proof will be in the pudding as to how the actual regulations pan out. So that's the kind of picture that we've got. And the Reserve Bank itself has indicated that they themselves are not happy with the progress and hopefully in the coming few weeks and maybe one or two months, we will see the output of all of the conversations that have taken place over the last two years.

Michael Avery (4:52)

Absolutely. And we'll come to the idea of costs and interchange because ASAP has produced two cost of payments and interchange papers in that period where you've examined the payment cost stack. But maybe for someone listening to this who isn't quite aware of just how much the system is changing underneath their feet, Parsons old payment system management functions are now moved to the Saab and PayInk, while PayInk is evolving towards this idea of a national payments utility because you've got the Saab as an equity shareholder in PayInk. So it replaces the old bank serve. Just explain to somebody outside payments why that matters. What has actually changed beneath the bonnet?