The Legal and Regulatory Framework of Mobile Banking and Mobile Payments in South Africa

• Author: Vivienne Lawack-Davids
• Position: Faculty of Law, Nelson Mandela Metropolitan University, Port Elizabeth, South Africa
• Pages: 318-327

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318

The Legal and Regulatory Framework of Mobile Banking and Mobile

Payments in South Africa

Vivienne Lawack-Davids

Faculty of Law, Nelson Mandela Metropolitan University

Port Elizabeth, South Africa

vivienne@nmmu.ac.za

Abstract. South Africa is a developing economy and has both a first and second economy.

One of the problems that it faces is that of the “unbanked”, that is, a large segment of the

population does not have bank accounts and “banking” happens through informal means. It also

appears from latest figures that more people in South A frica have mobile phones than bank

accounts. The usage of mobile banking and in particular, p ayments by means of mobile phones,

has increased in recent years, with consequent impacts viewed from a leg al and regulatory po int

of view. This paper seeks to examine th e legal and regulatory framework pertaining to mobile

banking, and in particular, mobile payments in South Africa. Regulatory gaps and areas for

improvement are highlighted. The author argues for a more flexible approach to regulation in

South Africa.

© 2012 Vivienne Lawack-Davids. P ublished by JICLT. All rights reserved.

1.Introduction

Continuing technological innovation and competition among existing banks and new market entrants has

allowed for a much wider array of banking products and services for retail and wholesale b anking custo mers.

These include tr aditional activities such as acce ssing financial information, obtaining loans and opening deposit

accounts, as well as relatively new products and services such as electronic account payment services,

personalised financial ‘portals’, account aggregation a nd business-to-business market exchan ges. Mobile

banking and consequently, mobile payments are the latest i n a myriad of technological innovations in the

banking industry. The dependence on technology for the provision of these services with the necessary security

and the c ross-border nature of transactions present additional risks for banks a nd new challenges for banking

regulators.

The aim of this paper is to provide an overview of the legal and regulatory framework for mobile banking in

South Africa and focuses specifically on mobile payments. The author highlights some of the regulator y

challenges relating to the development of mobile banking and mobile payments in South Africa.

2. Definition of Mobile Banking and Mobile Payments

Mobile banking falls within the definition of “electronic banking”. “Electronic banking”, or “e-banking”

includes the provision of retail and small value banking products and services through electronic banking

channels as well as large value electronic payments, and other wholesale banking services de livered

electronically.

1

In other words, e-banking is the use o f electronic delivery channels for banking products and

services. It is a subset of e-finance. The most important electronic delivery channels are the Internet, wireles s

communication networks, automated teller machines (ATMs), telep hones and mobile phones. Whilst e-banking

1

Bank for International Settlements. 2001. Risk Management Principles for e-Banking , p3. Hereinafter “BIS”.