Slower transaction speeds anticipated as cross-border payment changes close in

Martin Endjala

Economist and independed bank reseacher has advised businesses and individuals to anticipate longer payment turnaround times once anticipated as cross-border payment comes into effect.

Josef Sheehama, said this in an interview with the Windhoek Observer on the impact of the implementation of making and receiving payments across borders within the Common Monetary Area (CMA), encompassing Namibia, Eswatini, Lesotho, and South Africa.

He said individuals and entities will be impacted by the Bank of Namibia’s Payment System Determination 9, or PSD 9.

“This implies that businesses in South Africa will no longer be permitted to collect debit orders from clients who have Namibian accounts in line with PSD-9. Customers will no longer be able to send money to a Namibian account using the electronic fund transfer (EFT) method that they used to use to transact when purchasing goods,” explained Sheehama.

He said this is due to the global Payment Society for Worldwide Interbank Financial Telecommunications (SWIFT), which must be used to initiate all cross-border payments to a person or business in the CMA.

BoN’s principal communications team leader, Sandra Garises, said the possible impact of PSD-9 on the consumer entails potentially slower transaction speeds and costs associated with the migration of EFT transactions within the CMA.

“It is, however, the Bank’s position that the arrangements to migrate the processing of the cross-border CMA low-value EFT transactions to the SADC-RTGS for settlement should not unduly impact the customer experience,” she said.

She explained that BoN has issued the directive on the user fees and charges and the Speed of Cross-border CMA Low-Value Transactions (PSDIR-9), to regulate user fees, transaction speed, and regulatory reporting for cross-border CMA low-value transactions.

Garises added that BoN has also issued an Exchange Control Circular No.2024/01, which provides relief to the banking institutions in terms of regulatory reporting for cross-border CMA low-value transactions below N$1 million for individual clients and N$5 million for corporate clients.

Bank of Namibia (BoN), last new payment saystem was originally scheduled to come into effect on 30 April but its implementation was moved to 30 September.

She said the extension aims to enable banking institutions to incorporate the PSDIR-9 in their environments as well as to ensure that PSD-9 implementation is aligned with the rest of the CMA countries when the current cross-border interim EFT solution is decommissioned.

“It is important to further emphasise that the migration of crossborder CMA low-value transactions to the SADC-RTGS platform is a temporary solution, with plans for a permanent arrangement once an appropriate regional payment system is established,” she explained.

She added that BoN remains committed to ensuring an efficient, secure, and cost-effective national payment system while promoting financial inclusion, innovation, and healthy competition.

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