FINASA PAYMENT WORKING GROUP INVITATION

Join FINASA’s Payments Working Group and the eZAR Industry Stablecoin Interoperability Program

With the FSCA’s recent issuance of over 150 CASP licenses, Fintechs across South Africa now have the option of using digital assets as regulated financial instruments in providing licensed financial services to users. Furthermore, the SARB issued a digital payments roadmap that includes specific target actions over the next 2 years to expand access to the payment system for non-banking entities with a clear requirement to test use cases for stablecoins. In conjunction with these two regulatory developments, various ZAR Stablecoins are already enabling revolutionary new mechanisms for Fintechs to participate in payment systems in a compliant, reliable, accessible and interoperable way.

As a valued member of the financial industry, we are pleased to extend an exclusive invitation to collaborate in FINASA’s newly launched Payments Working Group (“PWG”) to participate in our first workshop series under the eZAR Industry Stablecoin Interoperability Program where we will explore the viability of ZAR Stablecoins on an Open Regulated User Network (OpenRUN) that draws on work initiated by participants of the SARB’s wCBDC experiment (Project Khokha 2).

The PWG is a strategic effort designed to foster innovation, collaboration, and growth within the payments sector and provide regulators with insights into the latest trends by acting as a voice for Fintechs in the payment industry. By bringing together leading organisations, we aim to address the evolving challenges and opportunities in payment systems, streamline processes, and drive the adoption of emerging technologies. We are proud to start this process with the eZAR Industry Stablecoin Interoperability Program as our first activity.

FINASA has partnered with Block Markets Africa to host this initial twelve week PWG Program on an Open Regulated Network that is exclusively operated by licensed FSPs. Block Markets Africa has deep experience consulting, developing, and operating regulated DLT based financial service infrastructures, products, and services, having been selected in 2020 to participate as a technical vendor in the SARB’s widely publicised Project Khokha 2 program where leading institutions explored the impact of decentralised technology on financial market infrastructures.

During PK2’s extended multi-year program BMA facilitated regular weekly workshops that tested various hypotheses of the SARB’s program in collaboration with regulatory bodies and banking participants, making them ideally suited to now facilitate FINASA’s PWG eZAR Industry Stablecoin Interoperability Program.

FINASA’s PWG members are invited to participate from Friday 20 September 2024 through Friday 6 December 2024 in weekly workshops, where we will cover twelve key areas to assess the viability, accessibility, compliance, utility, and interoperability of ZAR stablecoins as a digital payment service for licensed and regulated Fintechs on the Open Regulated Network in the Program.

Alignment with SARB Digital Payment Roadmap Actions of April ‘24

“Towards Inclusive, Accessible, Effective And Sustainable Digital Payments In South Africa”

The SARB’s Digital Payment Roadmap of 18th April 2024 demonstrates a clear mission of open access to the payment system, with the actions in Annexure B of the report documenting the SARB’s intended partnership with industry to achieve these goals, summarised below:

Whilst the initial 3 actions focus on data access, energy, and literacy, the other 14 actions clearly relate to specific types of digital payment innovations. Action 17 explicitly list stablecoins as a mechanism to explore, and this first FINASA PWG program will do so by testing the viability and interoperability of ZAR stablecoins issued and used exclusively by licensed FSPs (CASPs) to address the majority (highlighted actions 5 - 15) of the SARB’s roadmap.

Participation options for PWG members

Members can opt to participate at various levels as follows:

As a participant of PWG, you will have the opportunity to:

Collaborate with industry peers to shape the future of payment solutions.
Participate in high-level discussions and working groups focused on critical issues such as regulatory changes, technological advancements, and consumer trends.
Access exclusive resources, research, and insights to support your strategic goals.
Access industry toolkit and network to test live use cases using an interoperable Stablecoin (eZAR) framework for payments, rewards, p2p transfers, and digital assets.
Play an active role in policy discussions that impact the payments ecosystem.

Collaborate as an observer by attending the weekly workshops to observe activities first-hand and joining in on the discourse (for more detail please contact us), or become an Active Participant by performing practical live-money and real-world tests by you and your team and share your experiences. For information on available options to participate actively please refer to Annexure B, or reach out to us by email.

Technical Participants are also welcome to integrate their wallet application, stablecoins, or digital asset payment services with the Open Regulated Network to demonstrate the unique interoperability capability of regulated payment tokens, and encourage active participants to experiment with them during the respective weekly workshops. Please reach out to us by email for details on the various levels of technical participation available ranging from running your own network relay node, token bridges, swap contracts, enterprise APIs, and more, or refer to Annexure C.

eZAR Industry Stablecoin Interoperability Program Workshops

The Program agenda for the weekly workshop will set out clear real-world questions to be answered with a combination of regulatory, technical, and practical demonstrations for the working group to collaborate on as follows:

The workshops will be facilitated by FINASA and each respective workshop will include specific industry partners relating to the week’s agenda that are already delivering solutions that meet some of the requirements as set out in the SARB’s Digital Payment Roadmap.

Presenters

Workshop presenters will - among other industry leaders and knowledge experts - include:

Darren Franks (FINASA),
Danielle Lawrence (FINASA),
Paul Mitchell (Blockhouse Consulting),
Tobie van der Spuy (Block Markets Africa),
Craven Buitendach (Block Markets Africa),
Anton Coertzen (Block Markets Africa),
Sean Emery (RainFin),
Neelan Narasimulu (Sanlam),
Blake Player (VALR),
Paul Wenborn (Ecentric Payment Systems),
Simon Dingle (Inves/ZARP),
Theo Kitshoff (Sticitt)

Exclusions

To ensure strict adherence to all existing compliance requirements and demonstrate that all activities within the program are provided for under existing regulations, the scope will be limited to focus exclusively on domestic applications for FIAT backed ZAR stablecoins.

All transactions will be with real value, and where FIAT payments are concerned all transactions will be made to/from licensed FSPs with the support of licensed TPPP/PSPs.

Furthermore all token transactions will be made on a regulated public permissioned network where each user has been KYCd by a licensed FSP and where each wallet transaction is traceable to a Key Individual at a licensed CASP to effectively demonstrate the enforceability of regulations on each user.

Please note that foreign currency denominated tokens like USDT, USDC, or DAI, as well as cross-border remittances and foreign transactions are explicitly excluded from this 12 week program, however a later phase may specifically explore these in the context of exchange control regulations.

FINASA Objectives for the Payment Working Group

We believe your organisation’s expertise and leadership would be an invaluable addition to this initiative. Your participation will not only benefit your company but also contribute significantly to the advancement of our industry.

The PWG aims to achieve the following main objectives:

1. Standardisation and Interoperability

Develop and promote standardised protocols and procedures for payments to ensure seamless interoperability across different platforms, institutions, and regions.

2. Enhancing Security and Fraud Prevention

Identify and implement best practices for securing payment systems, minimising fraud, and protecting consumer data.
Work on adopting or developing advanced authentication and encryption technologies.

3. Innovation and Technology Adoption

Explore and evaluate new payment technologies, such as blockchain, digital currencies, or real-time payments.
Encourage the adoption of emerging technologies that can streamline processes, reduce costs, and improve user experiences.

4. Regulatory Compliance

Ensure that all payment systems and processes comply with relevant local, national, and international regulations.
Monitor changes in regulations and work on adapting systems and practices accordingly.

5. Cost Efficiency and Optimisation

Analyse current payment processes to identify areas where costs can be reduced.
Develop strategies to optimise transaction processing, settlement times, and reduce operational inefficiencies.

6. Customer Experience

Enhance the end-user experience by improving the speed, reliability, and convenience of payment systems.
Focus on developing user-friendly interfaces and ensuring accessibility for all users.

7. Collaboration and Stakeholder Engagement

Facilitate collaboration between different stakeholders in the payments ecosystem, including asset managers, financial institutions, Fintech companies, regulators, and consumers.
Create forums or channels for ongoing dialogue and feedback.

8. Risk Management

Identify potential risks associated with payment systems and develop strategies to mitigate these risks.
Monitor and assess the impact of global financial trends and economic conditions on payment systems.

9. Market Development and Expansion

Explore opportunities for expanding payment services to new markets or customer segments.
Work on initiatives to increase financial inclusion through more accessible payment solutions.

10. Research and Development

Conduct research on trends, challenges, and opportunities in the payments landscape.
Drive innovation through pilot programs, partnerships, and collaborations with tech companies and startups.

We would be honoured to have you on board and look forward to the possibility of working together. If you have any questions or need further information, please do not hesitate to contact me directly at 082 669 8967 or darren@finasa.org.za.

We are excited about the possibilities this initiative holds and hope to welcome you as a member of the FINASA PWG.

Darren Franks

Co-Founder

FinTech Association of South Africa

The FinTech Association of South Africa is a registered NPO 283-814