National Payment System Act, 1998

This is the version of this Act as it was from 28 October 1998 to 29 October 2004. Read the latest available version.
Jurisdiction
South Africa
Citation
Act 78 of 1998
Date
Language
English
Type
Legislation
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South Africa

National Payment System Act, 1998

Act 78 of 1998

(English text signed by the President.)ACTTo provide for the management, administration, operation, regulation and supervision of payment, clearing and settlement systems in the Republic of South Africa; and to provide for connected matters.BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:—

1. Definitions

In this Act, unless the context otherwise indicates—"bank" means a bank as defined in section 1 of the Banks Act;"Banks Act" means the Banks Act, 1990 (Act No. 94 of 1990);"branch of a foreign institution" means a branch by means of which a foreign institution conducts the business of a bank in the Republic in terms of a written authorisation granted by the Registrar of Banks in terms of section 18A of the Banks Act;"clear" or "clearing" means the exchange of payment instructions;"money" means a banknote or coin issued by the Reserve Bank in terms of section 10(1)(a)(iii), read with section 14 of the South African Reserve Bank Act;"mutual bank" means a mutual bank as defined in section 1 of the Mutual Banks Act;"Mutual Banks Act" means the Mutual Banks Act, 1993 (Act No. 124 of 1993);"netting" means the determination of the nett payment obligations between two or more system participants within a payment clearing house or the determination of the nett settlement obligations between two or more system participants within the payment system;"payment clearing house" means an arrangement between two or more system participants governing the clearing of payment instructions between those system participants;"payment instruction" means an instruction to a system participant to transfer funds or make a payment;"payment obligation" means an indebtedness that is owed by one system participant to another as a result of the clearing of one or more payment instructions;"payment system" means a system that enables payments to be effected between a payer and a beneficiary;"payment system management body" means a body recognised by the Reserve Bank in terms of section 3(1);"person" includes any partnership;"Reserve Bank" means the South African Reserve Bank referred to in section 2 of the South African Reserve Bank Act;"settlement instruction" mess an instruction given to the settlement system by a system participant or by a payment clearing house to effect settlement of one or more payment obligations or to discharge any other obligation of one system participant to another system participant;"settlement obligation" means an indebtedness that is owed by one system participant to another as a result of one or more settlement instructions;"settlement system" means a system established and operated by the Reserve Bank for the discharge of payment and settlement obligations between system participants;"South African Reserve Bank Act" means the South African Reserve Bank Act, 1989 (Act No. 90 of 1989);"system operator" means a person authorised by the payment system management body to provide clearing processing services on behalf of two or more system participants or a payment clearing house;"system participant" means a member of the payment system management body.

2. Powers and duties of Reserve Bank regarding payment system

(1)The Reserve Bank, as contemplated in section 10(1)(c) of the South African Reserve Bank Act, may exercise the powers and must perform the duties conferred and imposed on it by this Act.
(2)The bored of directors of the Reserve Bank may, in writing and on such conditions as the board considers necessary—
(a)delegate to any officer of the Reserve Bank any power conferred on the Reserve Bank by this Act; or
(b)authorise any such officer to perform any duty imposed on the Reserve Bank by this Act.
(3)Any delegation of a power or authorisation to perform a duty under subsection (2)—
(a)does not prevent the board of directors of the Reserve Bank from exercising that power or performing that duty; and
(b)may at any time be withdrawn in writing by that board.

3. Payment system management body

(1)Subject to subsection (2), the Reserve Bank may recognise a payment system management body established with the object of organizing, managing and regulating the participation of its members in the payment system.
(2)The Reserve Bank may recognise a payment system management body as contemplated in subsection (1) if that Bank is satisfied that—
(a)the payment system management body, as constituted, fairly represents the interests of all banks, mutual banks and branches of foreign institutions participating in the payment system;
(b)the deed of establishment or constitution, as the case may be, and the rules of the payment system management body, including the rules relating to admission as members of that body, are fair, equitable and transparent; and
(c)it will be enabled to adequately oversee the affairs of the payment system management body and its members in the discharge of the Reserve Bank’s responsibilities, specified in section 10(1)(c)(i) of the South African Reserve Bank Act, regarding the monitoring, regulation and supervision of payment, clearing and settlement systems.
(3)Only—
(a)the Reserve Bank; and
(b)a bank, mutual bank or branch of a foreign institution that complies with the entrance and other applicable requirements laid down in the rules of a payment system management body,
may be members of the payment system management body.
(4)No body, member of that body or any other person may participate in the settlement system unless—
(a)in the case of that body, the body is recognised by the Reserve Bank as a payment system management body in terms of subsection (1); or
(b)in the case of that other person, the person is a member of a payment system management body recognised by the Reserve Bank as contemplated in paragraph (a).

4. Objects and rules of payment system management body

(1)The objects of the payment system management body are to manage and control all matters affecting payment obligations and the clearing or netting of payment obligations and, in connection with those objects—
(a)to provide a forum for the consideration of matters of policy and mutual interest concerning its members;
(b)to act as a medium for communication by its members with the South African Government, the Reserve Bank, the Registrar of Banks, the Registrar of Financial Institutions, any financial or other exchange, other public bodies, authorities and officials, the news media, the general public and other private associations and institutions; and
(c)to deal with and promote any other matter of interest to its members and to foster co-operation between them.
(2)In addition to any other provisions thereof, the rules of the payment system management body must empower that body—
(a)to admit members and to regulate, control and terminate membership;
(b)to constitute, establish or dissolve any body, committee or forum consisting of its members and which has an impact on, interfaces with, has access to or makes use of payment, clearing or settlement systems or operations;
(c)to—
(i)determine the criteria subject to which any person is to be authorised to act as a system operator within the payment system in order to provide specific services to one or more members of the payment system management body or to act on behalf of those members; and
(ii)authorise that person as such a system operator in accordance with those criteria; and
(d)to determine criteria subject to and in accordance with which a member may be authorised to introduce any person to provide payment services.

5. Settlement provisions

(1)In this section ‘money" means a banknote or coin issued by the Reserve Bank in terms of section 10(1)(a)(iii) read with section 14 of the South African Reserve Bank Act.
(2)The discharge of settlement obligations between system participants is effected in money or by means of entries passed through the settlement system.
(3)A settlement that has been effected in money or by means of an entry to the credit of the account maintained by the beneficiary system participant with the Reserve Bank for settlement purposes, is a final and irrevocable settlement.
(4)No settlement in terms of a settlement instruction which has been finally and irrevocably effected in terms of subsection (3) may be reversed or set aside.
(5)When a system participant is wound up, a copy of—
(a)the application for winding-up, when it is made; and
(b)the subsequent winding-up order, must be lodged with the Reserve Bank.
(6)When a system participant is wound up, the relevant winding-up order does, despite sections 341 (2) and 348 of the Companies Act, 1973 (Act No. 61 of 1973), not affect any settlement that has become final and irrevocable in terms of subsection (3) prior to the lodgement of the copy of that order with the Reserve Bank in terms of subsection (5).
(7)The Reserve Bank may, in consultation with the payment system management body, prescribe by notice in the Gazette such conditions, rules or procedures as it considers necessary regarding the issue of settlement instructions and discharge of settlement obligations.

6. Clearing provisions

(1)No person may clear payment instructions unless that person is a system participant.
(2)Any person that contravenes the provisions of subsection (1) is guilty of an offence.

7. Control of payment intermediation

(1)In this section—
(a)"holding company" means a holding company contemplated in section 1(4) of the Companies Act, 1973 (Act No. 61 of 1973); and
(b)"subsidiary" means a subsidiary contemplated in section 1(3) of the Companies Act, 1973.
(2)Subject to subsection (3), no person may as a regular feature of that person’s business accept money or payment instructions from any other person for purposes of making payment on behalf of that other person to a third person to whom that payment is due, unless the person so accepting money or payment instructions—
(a)is a system participant;
(b)is a person introduced by a system participant in accordance with criteria determined in terms of section 4(2)(d);
(c)is the postal company as defined in section 1 of the Post Office Act, 1958 (Act No. 44 of 1958), or the Post Office Savings Bank established by section 52 of that Act; or
(d)is a person or one of a category of persons exempted by the Minister of Finance in terms of subsection (4).
(3)Subsection (2) may not be construed as prohibiting the acceptance of money or payment instructions—
(a)by any person acting as the duly appointed agent of the person to whom the payment is due;
(b)by a holding company from its subsidiary, or by a subsidiary from its holding company, or by one subsidiary from another subsidiary of the same holding company; or
(c)for purposes of the effecting of a money lending transaction by an agent or a mandatory as contemplated in paragraph (ff) or (gg), respectively, of the definition of "the business of a bank" in section 1 of the Banks Act.
(4)The Minister of Finance may, after consultation with the Reserve Bank and the payment system management body, by notice in the Gazette and subject to such conditions as the Minister may determine, exempt any person or category of persons from the provisions of subsection (2) if the Minister is satisfied that such exemption will be in the public interest and will not cause undue risk to the payment system.
(5)Any person that contravenes the provisions of subsection (2) is guilty of an offence.

8. Netting agreements and netting rules

(1)The provisions of this section apply despite anything to the contrary in the law relating to insolvency or in the Banks Act or the Mutual Banks Act.
(2)If a system participant is wound up or placed under judicial management or a curator is appointed to a system participant, any provision contained in a written netting agreement to which that system participant is a party, or any netting rules and practices applicable to the system participant, is binding upon the liquidator, judicial manager or curator, as the case may be, in respect of any payment or settlement obligation—
(a)which has been determined through netting prior to the issue of the winding-up order or judicial management order or the appointment of the curator, as the case may be; and
(b)which is to be discharged on or after the date of the winding-up order, judicial management order or the appointment of the curator, as the case may be, or the discharge of which was overdue on the date of the winding-up order, judicial management order or appointment of the curator, as the case may be.

9. Utilisation of assets provided as security to Reserve Bank or payment clearing house

Despite anything to the contrary in the law relating to insolvency, any asset of a system participant which was provided prior to the issue of any order for that system participant’s winding-up, by that participant—
(a)to the Reserve Bank as security for a loan in respect of its settlement obligations may be utilised by the Reserve Bank to the extent required for the discharge of those settlement obligations of the system participant; or
(b)in terms of a written agreement with any payment clearing house, as security in respect of its payment obligations, may be utilised by the payment clearing house to the extent required for the discharge of those payment obligations.

10. Information

(1)The Reserve Bank has access to any information relating to the volumes or values of payment and settlement instructions or payment and settlement obligations, and system participants must on request provide such information to the Reserve Bank.
(2)Subject to subsection (3), any information—
(a)obtained by the Reserve Bank in terms of subsection (1); and
(b)identifying a specific system participant,
is confidential and may not be disclosed by any director or officer of the Reserve Bank to any person, except to an officer of the Reserve Bank who requires that information for purposes of the execution of his or her duties in terms of this Act, the South African Reserve Bank Act, the Banks Act or the Mutual Banks Act.
(3)Despite subsection (2) of this section and section 33 of the South African Reserve Bank Act, the Reserve Bank may disclose any information of which the disclosure is necessary to protect the integrity, effectiveness or security of the payment system.
(4)A person that contravenes the provisions of subsection (2) is guilty of an offence.

11. Settlement of disputes

(1)In this section "business day" means any day other than a Saturday, Sunday or public holiday.
(2)If arty system participant considers itself wronged by a decision taken by the Reserve Bank under a provision of this Act, the matter is deemed to constitute a dispute between that system participant and the Reserve Bank, which dispute must be settled as provided in this section.
(3)The system participant concerned must in writing furnish the Reserve Bank with full particulars of its grievance, and thereafter the system participant and the Reserve Bank must attempt to settle the dispute by consensus within seven business days of the receipt by the Reserve Bank of those particulars.
(4)If the system participant and the Reserve Bank do not succeed in settling the dispute as contemplated in subsection (3), they may agree to attempt to settle the dispute by mediation within a further period of 10 business days.
(5)Mediation as contemplated in subsection (4) means a process whereby—
(a)the system participant concerned and the Reserve Bank agree on a mediator;
(b)the mediator familiarises himself or herself with the position held by the system participant concerned and the Reserve Bank, respectively;
(c)the mediator, the system participant concerned and the Reserve Bank discuss the dispute at a meeting attended by them all;
(d)the system participant concerned and the Reserve Bank at or following such meeting attempt to settle the dispute by consensus; and
(e)the system participant concerned and the Reserve Bank share the mediator’s costs equally.
(6)If the system participant concerned and the Reserve Bank are unable to settle the dispute by consensus as contemplated in either subsection (3) or (5), the dispute must be referred—
(a)to a single arbitrator to be agreed on between the system participant and the Reserve Bank; or
(b)failing such agreement, to an arbitrator appointed at the request of the system participant and the Reserve Bank by a recognised body concerned with the facilitation and promotion of the resolution of disputes by means of mediation or arbitration.
(7)An arbitrator referred to in subsection (6) must, as far as possible, be a person appointed on account of his or her knowledge of the law and the payment system.
(8)The provisions of the Arbitration Act, 1965 (Act No. 42 of 1965), apply, with the changes required by the context, to an arbitration contemplated in subsection (6).
(9)The decision of the arbitrator is final and binding on the system participant concerned and the Reserve Bank.

12. Directives by Reserve Bank

(1)In this section "systemic risk" means the risk that the failure of one or more system participants, for whatever reason, to meet their payment obligations within the payment system or their settlement obligations within the settlement system, may result in any or all of the other system participants being unable to meet their respective payment or settlement obligations.
(2)If reasonable grounds exist to believe that any person is engaging in or is about to engage in any act, omission or course of conduct, with respect to the payment system, that results or is likely to result in systemic risk, or is or will be contrary to the public interest in the integrity, effectiveness or security of the payment system, the Reserve Bank may issue a directive in writing requiring that person—
(a)to cease or refrain from engaging in the act, omission or course of conductor to perform such other acts as are necessary to remedy the situation and are specified in the directive; or
(b)to provide the Reserve Bank with such information and documents, relating to the matter, as are specified in the directive,
within the period specified in the directive.
(3)Any person who neglects, refuses or fails to comply with a directive issued under subsection (2)(a) is guilty of an offence.
(4)respective of whether criminal proceedings have been or may be instituted against a person in respect of an offence referred to in subsection (3), the Reserve Bank may apply to a High Court having jurisdiction for an order directing that person to comply with a directive issued under subsection (2).

13. Retention of records

(1)Despite anything to the contrary in arty legislation relating to the retention of records, the Reserve Bank and system participants must retain all records obtained by them during the course of the operation and administration of the settlement system for a period of five years as from the date of each particular record.
(2)The retention of records in terms of subsection (1) may be effected by means of a computer as defined in section 1(1) of the Computer Evidence Act, 1983 (Act No. 57 of 1983).

14. Penalties

Any person convicted of an offence referred to in—
(a)section 6(2), 7(5) or 12(3), is liable to a fine not exceeding R 1 million or to imprisonment for a period not exceeding five years, or to both such fine and such imprisonment; or
(b)section 10(4), is liable to a fine not exceeding R 1000 or to imprisonment for a period not exceeding six months, or to both such fine and such imprisonment.

15. Review of Act

The Reserve Bank must, with the co-operation of the payment system management body, establish a standing committee—
(a)to review this Act from time to time; and
(b)to make recommendations to the Minister of Finance with regard to amendments to this Act which—
(i)in the opinion of that committee, have become advisable owing to changed circumstances; or
(ii)the administration of this Act has shown to be advisable.

16. Short title

This Act is called the National Payment System Act, 1998.
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History of this document

28 February 2014
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03 June 2013
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01 November 2008
Read this version
01 August 2008
Read this version
01 June 2006
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30 October 2004
Read this version
28 October 1998 this version
Commenced
20 October 1998
Assented to

Subsidiary legislation

Title Numbered title
Designation of Continuous Linked Settlement System as a Designated Settlement Systems, 2004 General Notice 2459 of 2004

Cited documents 5

Legislation 5
  1. Banks Act, 1990
  2. Electronic Communications and Transactions Act, 2002
  3. Mutual Banks Act, 1993
  4. Postal Services Act, 1998
  5. South African Reserve Bank Act, 1989

Documents citing this one 67

Gazette 54
  1. South Africa Government Gazette Regulation Gazette dated 1999-10-27 number 20581
  2. South Africa Government Gazette Regulation Gazette dated 2010-10-22 number 33655
  3. South Africa Government Gazette Regulation Gazette dated 2020-02-21 number 43033
  4. South Africa Government Gazette Regulation Gazette dated 2020-04-02 number 43199
  5. South Africa Government Gazette Regulation Gazette dated 2020-04-21 number 43242
  6. South Africa Government Gazette Regulation Gazette dated 2020-09-11 number 43703
  7. South Africa Government Gazette Regulation Gazette dated 2020-11-20 number 43914
  8. South Africa Government Gazette Regulation Gazette dated 2021-12-17 number 45645 part 1
  9. South Africa Government Gazette Regulation Gazette dated 2022-12-23 number 47765
  10. South Africa Government Gazette dated 1999-04-08 number 19935
  11. South Africa Government Gazette dated 2002-08-26 number 23763 part 1
  12. South Africa Government Gazette dated 2002-08-26 number 23763 part 2
  13. South Africa Government Gazette dated 2002-09-27 number 23868
  14. South Africa Government Gazette dated 2002-12-13 number 24167
  15. South Africa Government Gazette dated 2003-01-24 number 24262 part 2
  16. South Africa Government Gazette dated 2003-02-05 number 24331
  17. South Africa Government Gazette dated 2003-02-10 number 24344 part 1
  18. South Africa Government Gazette dated 2003-02-18 number 24415
  19. South Africa Government Gazette dated 2003-02-24 number 24649
  20. South Africa Government Gazette dated 2003-02-28 number 24661
  21. South Africa Government Gazette dated 2003-02-28 number 24662
  22. South Africa Government Gazette dated 2003-03-03 number 24666
  23. South Africa Government Gazette dated 2003-03-03 number 24667
  24. South Africa Government Gazette dated 2003-03-03 number 24668
  25. South Africa Government Gazette dated 2004-03-31 number 26206
  26. South Africa Government Gazette dated 2004-08-16 number 26675
  27. South Africa Government Gazette dated 2004-10-30 number 26949
  28. South Africa Government Gazette dated 2004-10-30 number 26953
  29. South Africa Government Gazette dated 2006-02-24 number 28546
  30. South Africa Government Gazette dated 2006-05-26 number 28867
  31. South Africa Government Gazette dated 2007-09-06 number 30261
  32. South Africa Government Gazette dated 2008-02-22 number 30802
  33. South Africa Government Gazette dated 2008-10-07 number 31491
  34. South Africa Government Gazette dated 2011-05-27 number 34323
  35. South Africa Government Gazette dated 2011-08-12 number 34510
  36. South Africa Government Gazette dated 2013-07-19 number 36666
  37. South Africa Government Gazette dated 2013-08-30 number 36779
  38. South Africa Government Gazette dated 2013-10-25 number 36951
  39. South Africa Government Gazette dated 2014-01-16 number 37237
  40. South Africa Government Gazette dated 2015-06-26 number 38894
  41. South Africa Government Gazette dated 2015-12-11 number 39504
  42. South Africa Government Gazette dated 2017-06-23 number 40930 part 1
  43. South Africa Government Gazette dated 2017-08-22 number 41060 part 1
  44. South Africa Government Gazette dated 2018-12-14 number 42100
  45. South Africa Government Gazette dated 2020-05-29 number 43358
  46. South Africa Government Gazette dated 2020-06-19 number 43447
  47. South Africa Government Gazette dated 2020-12-04 number 43962 part 1
  48. South Africa Government Gazette dated 2021-03-12 number 44274
  49. South Africa Government Gazette dated 2021-06-11 number 44701
  50. South Africa Government Gazette dated 2021-12-17 number 45649
  51. South Africa Government Gazette dated 2022-04-14 number 46242 part 1
  52. South Africa Government Gazette dated 2022-07-15 number 47019
  53. South Africa Government Gazette dated 2022-11-29 number 47596
  54. South Africa Government Gazette dated 2023-12-14 number 49891
Judgment 6
  1. ADCORP Fulfilment Services (Pty) Ltd v Prodigy Human Capital Architects (Pty) Ltd; In Re: Prodigy Human Capital Architects (Pty) Ltd v CCI SA (Umhlanga) (Pty) Ltd and Others (2018/17932) [2023] ZAGPJHC 579 (26 May 2023)
  2. Barko Financial Services (Pty) Limited v National Credit Regulator and Another (415/2013) [2014] ZASCA 114 (18 September 2014)
  3. Clientele Life Assurance Company Ltd and Another v Payment Association of South Africa (2021-42435) [2023] ZAGPJHC 991 (4 September 2023)
  4. Diener NO v Minister of Justice and Others (926 of 2016) [2017] ZASCA 180 (1 December 2017)
  5. Goldstar Finance (Pty) Ltd and Others v Capitec Bank (Pty) Ltd and Another (16589/23) [2023] ZAWCHC 199 (31 December 2023)
  6. Spar Group Ltd v Absa Bank Ltd (74870/2019) [2020] ZALCJHB 63 (14 August 2020)
Legislation 7
  1. Designation of Continuous Linked Settlement System as a Designated Settlement Systems, 2004
  2. Directive 1 of 2022: Conduct of accountable institutions relating to "wire transfers" or electronic funds transfers
  3. Directive for Conduct within the National Payment System in respect of the Financial Action Task Force Recommendations for Electronic Funds Transfers
  4. Disaster Management Act: Regulations relating to COVID-19
  5. Financial Markets Act, 2012
  6. Financial Sector Regulation Act, 2017
  7. National Credit Act, 2005