THE LEGAL AND REGULATORY FRAMEWORK OF THE NATIONAL PAYMENT SYSTEM (NPS) – PEELING THE LAYERS OF THE ONION

Abstract

The ambit of the National Payment System (NPS) or “payment system” is described in the South African Reserve Bank National Payment System Framework and Strategy 2010 (South African Reserve Bank 2006 (hereinafter “Vision 2010”) as “the entire process of making payment, in other words, it entails the process (including but not limited to) that enables the payer to make a payment, thepayer to issue a payment instruction via a payment instrument or other infrastructure, the institution to receive the payment instruction via clearing or otherwise, the process of clearing and settlement (where applicable), the beneficiary to accept the payment instruction, the beneficiary to deliver the payment instruction to an institution for collection, the institution to receive and deliver the payment collection into clearing and settlement, and the beneficiary to receive the benefit of the payment. Within the described process, banks, third-person payment providers, system operators, PCH system operators (PCH refers to a ‘payment clearing house’) and agents of payers and/or beneficiaries are included”. (The terms “NPS” and “payment system” are used interchangeably to denote the wider payment system and not individual payment streams.) In the first Shrek movie, the ogre described himself as complex and as having many layers, like an onion (see http://www.dreamworks.com). In order to understand the ogre, it is necessary to peel the layers of the onion. It is evident from the above description of the ambit of the NPS that it, like an ogre, is complex and has multiple layers. This note uses the concept of an onion to deconstruct the multiple layers of the NPS. These multiple layers are to the majority of people outside of NPS circles, including lawyers, a mystery. The note is, therefore, an attempt to demystify the legal and regulatory framework pertaining to the NPS by peeling the layers of the “onion”.