PASA
Annual Report - 2003 (tba)
OFFICE
BEARER’S
REPORT
While 2002 shall be remembered for depleting the
number of “payments banks” (Saambou Bank
and
BoE Bank), fortunately 2003 restored the ranks of
payments banks with the emergence of Teba Bank. “Payments” has
been further expanded by The SA Bank of Athens and
Capitec Bank extending their
payments reach into the ATM PCH and the application
by Standard Chartered Bank for PASA
membership.
The year saw a total of 21 banks being members of
PASA and participating in 12 payment streams.
Transaction volumes increased by approximately
1.25 million per month and overall payment values
increased in the region of R250 billion per month.
RTGS accounted for the bulk of this increase, with
batch payment systems increasing approximately
R400 million per month. The decrease in cheque
values accounted for approximately R21 billion
per month while EFT Credit values increased
approximately R20 billion per month.
PCH System Operators have performed faultlessly
in processing just short of 800 million transactions
in 2003. Management and staff of these entities
are to be congratulated for their dedicated attention
to
detail and management that has been responsible
for the reliability achieved. PCH Participant Groups
also made a meaningful contribution to the smooth
running of clearing systems within banks.
The collective effort in the payments arena results
in confidence being instilled in the NPS, which
does not
go unnoticed by world players who monitor our systemic
performance.
PASA Committees, PCH Participant Groups and workgroups
are to be congratulated for their effort,
dedication and hard work during 2003. While I will
not attempt to duplicate the PASA Annual Report, the
following stand out in my mind as being significant
achievements over the past year:
PCH Agreements
The completion of PCH Agreements for all payment
streams is a major milestone achievement in
terms of one of the first BIS core principles,
being “The
system (NPS) should have a well-founded
legal basis under all relevant jurisdictions.” The
various PCH Agreements, by way of Schedule 9,
further commits participants to the introduction
of risk reduction measures that lead to an even
more
sound and controlled NPS. PCH Participant Groups
are encouraged to address outstanding activities
during 2004. Clauses 24.2 of the PCH Agreements
require that greements be reviewed and PASA ExO
is in the process of initiating procedures for this.
Falkena Report/Collections Process Forum
The processing of collection debits, previously
highlighted as a potential weakness in the Falkena
Report, is making significant progress to resolving
the issues through the Collections Process Forum.Many
meetings have been held to agree the ideal path for
these collections. We are sure that
favourable mutual agreement will be reached in
the first half of 2004.
Review of the NPS Act
The Standing Committee for the Review of the NPS
Act met on several occasions during the year and
meaningful progress has been made toward finalising
the amended Act. This will bring finality to
issues such as participation in the NPS, cementing
the activities of a curator or liquidator and also
incorporating flexibility for the SA Reserve Bank
to issue directives pertaining to the NPS Act
generally.
PASA Regulatory Framework
PASA ExO updated the PASA Regulatory Framework
with assistance from member banks and the
fruits of their work have been published on the
PASA website. This replaces cumbersome paper
copies and enables easy update by PASA ExO. Access
to the on-line PASA Regulatory Framework
has also been welcomed by PASA member banks.
Non-Bank Participants in the NPS
Postbank and Ithala Bank lead the way in being
the first non-bank entities to participate in the
NPS
during 2004 following the creation of rules for
non-bank participation. Sponsoring banks will formalise
their relationship with the non-bank participants
via agreements, which require to be lodged with
PASA.
PCH Clearing Rules and Service Level Agreements
(with PCH System Operators)
Many PCH Participant Groups have already lodged
their clearing rules and Service Level Agreements
with PASA and change to these rules are subject
to PASA’s efficient Change Control Process.
GENERAL
While work has in many cases already commenced
regarding the following projects, the payments industry
would do well to finalise these during 2004:
Bank Entry and Participation Criteria
This project has been on the industry’s high
priority agendas for some years but the outlook
for
finalisation this year appears positive.
Sort at Source
Developments during 2003 are encouraging and it
is likely that pending a thorough analysis of the
risks in this arena, industry rules and standards
will be introduced.
Sponsorship and Mentorship Arrangements
Through a series of workshops attended by PASA
ExO, SARB and PASA member bank
representatives, a process of assisting new entrants
into the payments arena has been developed.
The creation of rules and responsibilities relative
to the assisted entrant as well as the
sponsoring/mentoring bank caters for a transparent
and monitored environment for the payments
industry. Counter-party banks are hereby consulted
and notified about sponsorship/mentorship
relationships and accordingly are able to better
understand the risk profile of the new entrant.
CMA Developments
The Namibian payments industry has undergone significant
change during 2003 and it is expected
that South African developments will be re-instituted
to address shortcomings highlighted during 2002
following the issue of the Position Paper on Common
Monetary Area (CMA) Cross-border payments (2001/01
issued 22 October 2001).
NPS Framework and Strategy
The NPS Framework and Strategy document published
in November 1995 is nearing the end of its 10
year life-span and the NPS Department of SA Reserve
Bank have already indicated the need for plans
for the next NPS strategic life-cycle. Efforts
expended in reviewing the NPS Act provide a springboard
to such an initiative.
On behalf of PASA Council, I express our sincere
appreciation of the dedication and hard work expended
by the PASA Executive Office team, PASA committees,
PCH Participant Groups and the
NPS Department of the SA Reserve Bank. Effort and
commitment displayed by many has facilitated
the success that we have seen in 2003 and I wish
you all well in your endeavours in 2004.
Brian Le Sar
PASA Council Chairman
