Issuing of Electronic Funds Transfer Credit Payment Instructions on behalf of the payer

Issuing of Electronic Funds Transfer Credit Payment Instructions on behalf of the payer

• 02 December 2024
• Regulatory Compliance and Legislation
• South African Accounting Academy

Summary:

The South African Reserve Bank (SARB) has issued Directive 2 of 2024 on the issuing of Electronic Funds Transfer Credit Payment instructions on behalf of the payer in the National Payment System (NPS) which is effective from 15 February 2025.

Article:

The purpose of Directive 2 is to impose more stringent requirements on independent third parties issuing EFT Payment Instructions on behalf of payers, using screen scraping or any other technology tools, in the National Payment System.

Directive 2 sets out the risks relating to EFT Credit Payments, including inter alia, exposure to fraud, risk of financial loss or non-delivery of the goods/services purchased, etc.

This directive applies to any person issuing payment instructions on behalf of a payer, using screen scraping, or a similar tool in the NPS.

Directive 2 prohibits any person (including a juristic person) from issuing an EFT Payment Instruction on behalf of a payer unless certain requirements have been met - as set out in the Directive, where the following is provided:

• Registration requirements
• Conditions for registration
• Ongoing obligations
  • Marketing
  • Consumer awareness
  • Informed consumer consent
  • Operational risk
  • Payer data protection
  • Dispute resolution mechanism
  • Traceability, audit and record keeping
  • Liability risk management
  • Attestation of compliance
  • Reporting requirements
• Supervision and compliance monitoring
• Effective date and non-compliance
• Conclusion

The National Payment System (NPS) encompasses the entire payment process, from payer to beneficiary, and includes settlement between banks. The process includes all the tools, systems, instruments, mechanisms, institutions, agreements, procedures, rules or laws applied or utilised to effect payment. The NPS is a primary component of the country’s monetary and financial system as it enables the circulation of money, assisting transacting parties to make payments and exchange value.

The directive is effective 90 days after publication thereof, which was 15 November 2024 in the Government Gazette.

Click here to download the 22-page Directive 2 of 2024:

https://www.gov.za/sites/default/files/gcis_document/202411/51556gon5550.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• Certain clients of yours (e.g. persons issuing an electronic funds transfer credit payment instruction on behalf of the payer) must comply with specific laws and regulations, and which you must assess compliance with.  If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (Non-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
• As an auditor and independent reviewer, you also need to monitor your client’s compliance with all relevant directives/notices/communications issued by the SARB as a regulator.

Relevance to Your Clients:

• This directive applies to any person issuing payment instructions on behalf of a payer, using screen scraping, or a similar tool in the National Payment System (NPS).
• The client has a duty to report to the relevant regulators, as well as to comply with relevant directives/notices/communications published by the SARB as a regulator.

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