Electronic cards for the unbanked

Johannesburg - South Africans without bank accounts will soon be able to obtain chip cards onto which they can load money to use for payment on public transport and low-value retail purchases.

"Now these people will be able to go to a bank or other financial institution, obtain a contactless chip card and carry this in their wallets instead of cash," Payments Association of SA (Pasa) CEO Walter Volker said in a statement on Wednesday.

To enable this the finance minister had granted financial institutions a special exemption from the provisions of the Financial Intelligence Centre Act, to issue electronic payment instruments, such as contactless chip cards, to those without bank accounts.

The exercise was a joint effort by the Treasury, the Financial Intelligence Centre, the national transport department and Pasa.

One of the toughest challenges in South Africa had been finding ways to offer a variety of payment options to the unbanked, who had typically been limited to cash.

The timing of the exemption, which came into effect in May, was fitting, as the government had looked to offer commuters a single payment instrument that could be used for any mode of transport, as well as at retailers. Volker said the FIC Act exemption would enable financial institutions who wished to offer low value payment instruments the ability to issue these instruments at convenient locations, with minimal risks.

  - Sapa