payments technology initiatives in south africa and the ... technology initiatives in south africa...

Payments Technology Initiatives in

South Africa

and the

Southern African Development

Community Region

Enterprise Ireland

24 and 25 February 2015

Keith Smith

Payment Systems Consulting

Keith Smith ‘15

The Southern African Development Community (SADC)

Integrated Regional Electronic Settlement System (SIRESS)

� SIRESS is a Real Time Gross Settlement System (RTGS) developed by

the 15 SADC Member States to settle regional transactions among banks

within the SADC countries on a gross basis and in real time.

� This will facilitate the replacement of the inefficient and high inherent risk

processes and systems currently in place, with cost-effective electronic

alternatives for cross border payments and money transfers.

Keith Smith ‘15

Southern African Development Community (SADC)

Keith Smith ‘15

Southern African Development Community (SADC)

Angola

Botswana

DR Congo

Lesotho

Madagascar

Malawi

Mauritius

Mozambique

Namibia

Seychelles

South Africa

Swaziland

Tanzania

Zambia

Zimbabwe

Keith Smith ‘15

SIRESS: What? How? Why?

� The SADC payments modernization project was initiated by the

Committee of Central Bank Governors (CCBG) in the SADC region

� To achieve the objectives of the SADC Finance and Investment Protocol

(FIP)

� SADC countries should cooperate on payment, clearing and settlement

systems in order to facilitate trade integration.

� The creation of a SADC Central bank

� A common single currency.

� CCBG focuses activities from a regulatory perspective,

� SADC Bankers Association coordinates activities of commercial banks

� in developing the financial market infrastructures,

� establish regional clearing house operators to support the utilisation of SIRESS

� to develop the required regional payment instruments

Keith Smith ‘15

SIRESS: What? How? Why?

� A single-currency, cross-border electronic payments system serving the

SADC’s 15 member states is fast becoming a reality

� SIRESS went live in the CMA Rand common monetary area in July 2013

and is processing transactions worth R10bn a day

� The use of SIRESS for cross-border payments is optional for the 100

banks in the region

� It is expected however that in time regulatory compliance will oblige

participation and Central Banks will make it compulsory for all banks

involved in payments across borders to be on the SIRESS platform

� What is required is interoperability between payment systems and for

strong regulation

Keith Smith ‘15

SADC Payments Regulatory Framework

� Harmonisation of Payment System law

� Investigation and review of all laws, regulations and rules relating to payment

systems was completed

� A comparison of legal frameworks in all SADC countries was undertaken

� The legal framework in each country was compared to an international best

practice benchmark

�Gap analysis completed

�Recommendations relating to the harmonisation of Payment System Law was

completed

Keith Smith ‘15

Financial Market Infrastructure

Keith Smith ‘15

Financial Market Infrastructure

Fixed Broadband

Internet Subscribers (per 100 people)

(2012)

Internet Users

(per 100 people) (2012)

Mobile Cellular

Subscriptions (per 100 people)

(2012)

Commercial

bank branches per 100,000

adults (2012)

ATMs per

100,000 adults (2012)

Angola 0.16 16.9 49 11.37 19.10

Botswana 0.78 11.5 150 8.65 26.59

DRC 0.00 1.7 28 0.72 0.67

Lesotho 0.13 4.6 59 3.39 9.17

Malawi 0.01 4.4 28 3.35 4.43

Mauritius 10.57 - 113 21.57 43.62

Mozambique 0.08 4.8 33 3.78 6.90

Namibia 2.78 12.9 103 7.19 47.74

Seychelles 11.72 47.1 159 48.29 51.21

South Africa 2.18 41.0 135 10.42 59.93

Swaziland 0.27 20.8 66 7.09 28.95

Tanzania 0.01 13.1 57 2.21 14.57

Zambia 0.11 13.5 76 4.44 8.58

Zimbabwe 0.55 17.1 97 7.11 4.76

World Banks World Development Indicators / International Monetary Fund, Financial Access Survey (2012)

Keith Smith ‘15

Payment Services Infrastructure and Systems

� Application Service Providers

�Outsourcing of infrastructure and systems

� Third Party Processors

�On behalf of processing

� Money transfer services

�Domestic and cross border

� Electronic Money systems

�Mobile money

Keith Smith ‘15

�Public transport plays a significant role in the social and economic development of South Africa.

�A direct influence on quality of life of the majority of citizens.

�No of commuters reliant on public transport is expanding, and significant investment has been earmarked by Government to improve and modernize public transport services.

�Government has embarked on a program to transform services into an integrated mass rapid transit network.

� Strategic initiatives by transport authorities are aimed at transforming “from commuter-based modal transport to customer [user]-based public transport”

Public transport in South Africa

Keith Smith ‘15

�Bank issued payment product for AFC

�Account based

�Card holder has a client relationship with the issuing bank

�Payment transaction is a claim on an account based deposit held at the card Issuing Bank

�Non account based

�The card holder is anonymous but a fully auditable system

�Payment transaction is a claim on a prepaid float based deposit held by the card Issuing Bank

� EMV contactless is the bank standard

�eMoney for “pay-as-you-go”

�eTicket for multi journey period passes

Payment Systems in Public Transport

Keith Smith ‘15

XYZ

Transport

OperatorTransport

Authority

Fare Schedules

Route Schedules

Capacity Planning

Roster Planning

Strategic Planning

Transport Policy

Fare Subsidies

Transaction

Acquiring

Bank

Card Issuing

Bank

Clearing House

Data Warehouse

ATM

Value Load Terminal

eMoney Fare Collection and ITS

Keith Smith ‘15

XYZ

Transport

OperatorTransport

Authority

Fare Schedules

Route Schedules

Capacity Planning

Roster Planning

Strategic Planning

Transport Policy

Fare Subsidies

Card Issuing

Bank

Operator

Data Warehouse

eTicket Load Terminal

eTicket Fare Collection and ITS

Keith Smith ‘15

� Integrated transit data functionality

�Data specific to public transport functionality needs to be carried on the

payment card

�Accommodate various fare structures

�Distance based

�Tap-on and Tap-off

�Concessionary fares

�Pensioners

�Students, etc

�To carry Transit Products on the card - eTickets

�Multi-journey period pass or season tickets

�Daily, Weekly, Monthly

�Number of prepaid trips

Functionality specific to public transport

Keith Smith ‘15

� To achieve this a Data Structure in collaboration with various stakeholders was formulated

�Data structure needs to be carried on all bank issued cards to be used for public transport

�All anonymous prepaid cards will carry the data structure functionality by default

�In order to ensure interoperability, all Transport Authorities, Operators and technology providers need to ensure that data is written to, and read from the card, in a specified format and manner

Transit Data Structure

Keith Smith ‘15

Pre-Authorised/Prepaid

spending limit

eMoney

Prepaid transit product

• Operator A

• Operator B

• Operator C

Trip counter

Commencement date

Expiry date

eTicket

Tap on/off locations

Commuter Class indicator

Transit Data

Low value payments and prepaid tickets

Keith Smith ‘15


spending limit

eMoney


• Operator A

• Operator B

• Operator C

Trip counter

Commencement date

Expiry date

eTicket



Transit Data

On line load

Off line spend


Keith Smith ‘15


spending limit

eMoney


• Operator A

• Operator B

• Operator C

Trip counter

Commencement date

Expiry date

eTicket



Transit Data

Up to three transit

products uniquely

identified by

Operator ID

On line load

Off line redemption


Keith Smith ‘15


spending limit

eMoney


• Operator A

• Operator B

• Operator C

Trip counter

Commencement date

Expiry date

eTicket



Transit Data

GPS Coordinates

Station/Stop ID


Keith Smith ‘15

�Compliance Agency appointed by the NDOT as the custodian of the Data Structure specification and to certify the data structure functionality on cards and public transport terminals

�Cards

�Issuing banks will need to submit Card Association authorised sample cards carrying the Data Structure, for certification of the Data Structure functionality

�Loading Terminals

�EMV certified terminal devices that access the Data Structure on cards will need to be submitted by suppliers for certification of the Data Structure functionality

�Validators/Readers

�EMV certified terminal devices that access the Data Structure on cards will need to be submitted by suppliers for certification of the Data Structure functionality

Data Structure Functionality Certification

Keith Smith ‘15

Testing Tool for certifying the AFC Data structure functionality on EMV

dual interface payment cards

� A test tool is required by the South African National Department of

Transport Compliance Agency, which should also be available to all

stakeholders in the public transport industry, to test and certify the

functionality of the AFC Data Structure on EMV contactless cards to

ensure interoperability across all public transport services.

Keith Smith ‘15

�Banking Industry

�Issuing of cards

�banked commuters will be able to obtain cards as a result of a relationship with an issuing bank

�unbanked commuters will be able to obtain a prepaid stored value card from participating banks and/or 3rd party card issuers operating in conjunction with a bank

�Public Transport Operator cobranded payment cards

�Operator will issue/sell cards by choice as opposed to obligation

�Transaction acquiring

�Banks

�Payment Facilitators

�Loading of prepaid eMoney and eTickets

�Pre-Authorised Debit value load

�Transit Products load

�As determined by the Public Transport Operator

Role Players

Keith Smith ‘15

�Compliance Agency

�Custodian of the Data Structure specification

�Ensure specification remains relevant and meets public transport requirements

�Release updated version after consultation with all stakeholders when required

�Ensure backward compatibility of new versions

�No bespoke customised enhancements to the Data Structure specification will be considered and any enhancements must comply with the rules of open standards supporting the interoperability across all public transport services countrywide

�Provide certification services

�Ensure interoperability of Data Structure functionality across all public transport services

�Procure relevant test tools to test functionality of cards, loading devices and validators

�Publish generic business rules related to data structure functionality

�Issue certificates of compliance

Role Players

Keith Smith ‘15

� Third Party System Operators

�Provide card management and transaction switching services

�Provide cobrand card programs on a BIN sponsorship model

�Retailers

�Card distribution and sales�Over the counter

�Vending machines

�Value loading points of presence

�Transit product sales

Role Players

Keith Smith ‘15

� Technology Suppliers

�Fare Collection Validators

�Develop readers with EMV contactless functionality

�EMV certification of reader and payment application

�Develop applications to read/write to the Data Structure on the card

�Certification of the functionality of the Data Structure applications

� Transit Authorities and Operators

�Plan and implement public transport services in support of Government’s ideal of user driven fully integrated public transport services

Role Players

Keith Smith ‘15

Mobile Phone Passenger Information System for Public Transport

Services

� Passenger Information Systems are usually implemented by Rail and Bus

Rapid Transit services as well as public transport Operators with large bus

fleets who have an extensive number of service routes. These systems

are usually expensive to procure, operate and maintain.

� What is not available is a cost effective system that can be implemented

by all Operators, small and large, on all transport modes, that does not

require physical infrastructure to provide static and dynamic transit

information to commuters

Keith Smith ‘15

Transport

Authority

Fare Schedules

Route Schedules

Capacity Planning

Roster Planning

Commuter info

Strategic Planning

Transport Policy

Fare Subsidies

Data Warehouse

Application

Systems

Transport

Operator

Application

Systems

Television/Radio

Call Centre

Internet

SMS/App

Information signs

Intelligent Transport Systems

Keith Smith ‘15

Transport

Authority

Fare Schedules

Route Schedules

Capacity Planning

Roster Planning

Commuter info

Strategic Planning

Transport Policy

Fare Subsidies

Data Warehouse

Application

Systems

Transport

Operator

Application

Systems

Television/Radio

Call Centre

Internet

Information signs

Intelligent Transport Systems

SMS/App

Keith Smith

Payment System Consulting

[email protected]

Keith Smith ‘15

Open Road Tolling – Fleet Billing and Reconciliation System

� The South African National Roads Agency (SANRAL) has initiated various

projects to improve, upgrade and/or construct, in phases, approximately

560kms of national roads in and around the major cities in the Gauteng

Province, which is the economic hub of South Africa

� The improved road network will be tolled utilising Open Road Tolling

(ORT) with electronic and automated methods of levying and collecting toll

charges. Tolling of the 1st phase of approximately 185kms, using 42

tolling points (gantries) has already commenced and this will soon be

followed by extending the acceptance of the electronic tags at traditional

boom tolling points at existing toll plazas.

� Motor car and truck fleet owners and operators require an online or near

real time electronic vehicle tracking and billing system that will provide

them with detailed reporting on their vehicle’s gantry passes and reconcile

toll fees owing with the amount billed to them by the Electronic Tolling

Company.

Keith Smith ‘15

Open Road Tolling

Keith Smith ‘15

Open Road Tolling

Toll Fees Due

Various ways to pay

Keith Smith ‘15

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Keith SmithPayment System Consulting

[email protected]

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