South Africa's digital payments landscape has evolved significantly in recent years and currently consists of various payment methods such as debit, credit and fleet transactions; authenticated collections (DebiCheck); contactless payments; electronic funds transfer (EFT); PayShap and mobile money, among others.
On 18 April 2024, the South African Reserve Bank (SARB) published its digital payments roadmap. The document, entitled
Digital Payments Roadmap: Towards Inclusive, Accessible, Effective and Sustainable Digital Payments in South Africa, sets out a 17-action item plan for tackling identified obstacles, barriers and challenges to the adoption of an increased and effective use of digital payments in South Africa.
The agriculture sector stands to benefit from the convenience, inclusivity, and cost-effectiveness of digital payments, which have the potential for far-reaching application at all levels of the supply chain. Digitisation presents the possibility to streamline financial transactions, enhance operational efficiency, and enable more effective record-keeping. Potential opportunities for implementation in the sector include:
- paying the salaries of farm workers;
- paying for transport and selling produce;
- purchasing seeds, fertilisers and other agricultural supplies (with insight for customers into the specific conditions in which these goods are produced); and
- facilitating intra-trade among members of agricultural co-operative associations.
Legal considerations for agribusiness stakeholders and service providers
When agribusiness stakeholders decide to incorporate digital payments into their business operations, this will largely rely on payment service providers, payment facilitators, and payment processors (ie banks, payment system providers, and non-bank partnered or bank-sponsored providers of e-money services). This must be done in accordance with South Africa's constantly evolving regulatory framework.
Robust mechanisms to prevent fraud in this instance will be essential. The Financial Intelligence Centre Act 38 of 2001 (FICA Act) governs the prevention of money laundering and terrorist financing activities. It imposes multiple responsibilities on accountable institutions and reporting institutions, including registration, conducting customer due diligence, and complying with reporting and record-keeping requirements (as the case may be).
The Protection of Personal Information Act 4 of 2013 (POPIA) requires significant cybersecurity and cyber-resilience measures to be in place to protect people and their personal information. In such cases, digitisation initiatives must ensure that personal information is collected, processed, stored, and shared in compliance with POPIA guidelines. This involves getting consent from individuals, ensuring data accuracy, and implementing reasonable security measures to prevent unauthorised access to employee information that is onboarded for digital payroll purposes.
To the extent that agribusiness vendors contract with consumers directly or service providers offer services to consumers, the relevant digital payment systems must adhere to the Consumer Protection Act 68 of 2008 (CPA), which protects consumers from unfair trade practices and ensures transparent transactions.
Lastly, as the Electronic Communications and Transactions Act 25 of 2002 (ECTA) provides legal recognition for electronic communications and transactions, compliance with its provisions is crucial for the validity of digital payment systems, which largely comprise 'electronic transactions' and 'data messages'. Similarly to the provisions of the CPA, agribusinesses should adhere to ECTA's provisions regarding the protection of consumers' rights in facilitating electronic transactions, and in alignment with POPIA, agribusinesses must ensure that electronic transactions are secure by adhering to cybersecurity best practices.
Moving forward, agribusinesses must be mindful of the regulations associated with stepping into the realm of digitised payment systems, as well as developments in other sectors that may present collaborative opportunities for the advancement of agricultural digital payments.
