The global payments landscape is undergoing a significant transformation as Universal Payment Systems (UPS) gain traction. This trend, driven by the BRICS countries’ departure from SWIFT, is fundamentally reshaping the fintech industry.
UPS are decentralized and interconnected payment ecosystems that combine diverse payment methods, providing users with a seamless and efficient experience while reducing reliance on traditional banking channels. Several countries have developed their own UPS, leading to the siloing of payment ecosystems within individual nations. Examples include the United States’ ACH, the European Union’s SEPA, and China’s Alipay and WeChat Pay.
India’s Unified Payments Interface (UPI) is a notable example of a successful UPS. It has enabled instant fund transfers between banks using mobile devices, leading to a decline in the dominance of Visa and Mastercard within India’s digital payments ecosystem. UPI’s growth has also challenged the traditional revenue model of card networks, as interchange fees are now at risk.
The rise of UPS is disrupting the traditional fintech industry, with major players like Visa and Mastercard anticipated to feel the impact most profoundly. Each UPS has the potential to bypass traditional payment rails, representing a significant shift in the global payments landscape.
South Africa is also working towards developing a formal UPS. PayShap, a real-time Rapid Payment Platform (RPP), is one such initiative. It aims to reduce cash usage and introduce a push payment system for secure and lower-cost transactions. PayShap represents South Africa’s proactive approach to financial modernization.
Other fintech pioneers in South Africa, such as Payfast, JUMO, Adumo, and Kazang, are driving local economic growth through modernized payment methods. These innovators are collaborating with traditional financial institutions, regulatory bodies, and fintech accelerators to create localized payment solutions using cutting-edge technologies.
As UPS proliferate, questions arise about their impact on the dominance of Visa and Mastercard outside these systems and the potential for a comeback of traditional methods like traveler’s cheques. The evolving financial landscape is likely to witness a shift towards more autonomous and interconnected payment ecosystems, challenging global payment giants and fostering regional resilience.
