PASA
Annual Report - 2004 (tba)
OFFICE BEARER’S
REPORT 2004
The beginning of 2004 saw the end of the
implementation phase of PASA by virtue of the
completion of the process of creating PCHs for all
the existing payment streams. The last two payment
streams to be brought into line were those of Debit
and Credit Cards. During the year a number of
the principles upon which the PASA structure
is based would be tested. The first test proved
to be the ability of PASA to act upon non-compliance
to the rules and agreements.
The
measure of disbarring a bank from participation
for any non-compliance proved far too extreme
and could not be applied effectively in instances
of less serious contraventions. Refinement
of compliance enforcement measures were called
for and were in the process of development during
the year. A
further principle tested was that of decision
taking in the event of non-agreement by some
members. The
process of majority voting was applied but
was tempered with a call for extended efforts
to assure consensus.
The members of PASA, ably assisted
by the PCH System Operators, Bankserv, STRATE,
Visa and MasterCard as well as the South African
Reserve Bank, facilitating the Immediate Settlement
Payment Stream, were once again successful in
providing the economy with a near flawless capability
to exchange payments between banks to the value
of more than R44trillion (million, million) for
the year in 850million transactions. Whilst the
cheque payment stream is still showing a fairly
constant decline in volumes strong growth is being
experienced in all other payment streams with Debit
Card transactions showing an extreme rate of growth
from it’s fairly low base, reaching a level
of more than a R1,2 billion for the month
of December.
PASA and its members continued
during the year to enhance the robustness of
the payments environment whilst also being
involved in a number of new initiatives to
keep pace with advances in technology and customer
requirements. It
was with sadness but not without fond memories
that the members of PASA took leave of Ian Waldron
of Citibank and Roy Green of Nedbank who passed
away during the year, leaving spaces that required
serious effort to fill. Their legacy
will endure in the contribution they made to
the creation of structures and standards in
PASA.
New Payment Clearing Houses
New requirements for payment solutions
have resulted in the formation of three new
clearing houses during the year. The first, named
NuPay in reference to the original concept provides
for PIN and Card mandated debit collections, mainly
utilised by micro lenders. The PCH had only
two participant members but the end of the year
saw a number of banks confirming that they will
join an enhanced version of the PCH as soon as
some fundamental principles had been resolved between
the various stakeholders.
The
second clearing house to be launched during
2005 applied for approval during September
2004. This
PCH, named the RTC (Credit Push) PCH will exchange
real time credit transactions with a maximum value
of R5million per transaction, between the participants. Development
of the business requirements by the prospective
participants has occurred over a two year period. Towards
the end of the year the creation of a third PCH
for exchange of money transfer transactions where
customers might not have bank accounts has been
approved by PASA Council for implementation during
2005. This product is the result of agreement
reached between Government and the banks to
provide services for the un-banked.
Membership
The year ended with the Association consisting
of 21 members. The last transactions of Saambou
Bank Limited (under curatorship) were exchanged
late March 2004, following which their membership
terminated. Membership of Peoples Bank Limited,
that merged with Nedbank, terminated on 31 December
2004 and African Bank Limited’s application
that has been approved would see them joining effectively
on 1 January 2005. A number of banks increased
their participation by joining more payment streams. Membership
of the ATM PCH PG increased from 7 to 10 and that
of the Credit Card PCH from 7 to 9. Two organisations
involved in banking operations, but exempted from
the requirement to register as banks have been
sponsored participants in payment services for
some years. These arrangements were formalised
during the year.
PASA offices
The offices of PASA relocated to Parktown,
Johannesburg at the beginning of May 2004. The
new premises provided for improved meeting
and parking facilities in a more centralised
position with the added benefit of beautiful
suburban surroundings.
Off-shore operators
The settlements of local transactions settled
off-shore of Visa and MasterCard have been
addressed during the year with settlement
across the SARB accounts of banks being introduced
during July for Visa and MasterCard developing
systems to do so by April 2005.
CMA Clearing
The members involved in sponsorship of
banks in the Common Monetary Area (CMA) have
been involved in finalising agreements that
would formalise the correspondent arrangements
and thereby satisfy the SARB Position Paper
requirements.
Legal Committee
PASA Council approved a request for establishment
of a PASA Legal Committee constituted of
legal specialists from the member banks. The
creation of the committee was met with enthusiasm
from the various committees and workgroups
who immediately started to forward requests
for assistance through legal opinion in connection
with a number of issues. The committee has
already proven a valuable addition to the
workings of PASA.
NPS Act
The NPS Amendment Bill was signed during
October 2004. The amendments increased the
powers of the SARB to cover not only clearing and
settlement of transactions but all types of transactions
that constitute payments. These changes involve
PASA as it has been tasked with registration of
providers of payment instruments as well as being
involved in the setting of criteria for such parties. The
expanded mandate of the SARB has the effect that
PASA’s mandate has also been extended to
cover not only interbank transactions but also
on-us transactions. The effect of these
changes will be addressed during the course
of the new year.
Collections Forum
Concentrated effort went into the workings
of the Collections Forum during the last
half of the year as members and other stakeholders
tried to find workable solutions for the
collection of debt repayments in conjunction
with other payments in the low end of the
market where customers have been found to
be over extended by virtue of a number of
factors including, amongst others, unscrupulous
lending as a result of preferential collection
methods being applied. The
challenges of this issue have not yet been
exhausted and will continue to place a burden
on resources and ingenuity in the new year.
Business Continuity and Disaster Recovery
A comprehensive BCP/DRP policy has been
developed and was implemented to be followed
by a compliance confirmation process during
the new year. During the second half
of the year a process has been started to
identify and remove single points of failure
out of the telecommunications networks being
used in the systemically important systems.
Challenges
The members have to deal with some challenges
spilling over into the new year. The
most noteworthy being to find appropriate
solutions for the deployment of non-cash
transactions, such as script terminals and
bill payments, in the ATM payment stream,
that would prevent the features of the ATM
delivery mechanism to be used in arbitrage
of other payment streams.
Thank you
Our congratulations and thanks go to all
the management and staff of all the parties
involved in setting such high standard of
efficiency and reliability. The central processing model
applied in South Africa is continuing to prove
its value in providing the most efficient way to
ensure inter-operability and speed of processing
followed by settlement. Another year
of near faultless operation and the people
responsible for it can only be applauded
as the quiet efficiency thereof has come
to be an unnoticed feature of the economic
environment.
Brian Le Sar
Chairperson: PASA Ref: 7838
