Payment switch to save country E360m
MBABANE – Eswatini will save E360 million through the implementation of a payment switch product.
The switch product is expected to go live in the last quarter of the current financial year, which commenced on Monday. Minister of Finance Neal Rijkenberg assured Members of Parliament (MPs) last week that the switching of local-based transactions was scheduled to go live from the last quarter of the financial year. This, after the Nhlambeni MP wanted to know how far the Central Bank of Eswatini (CBE) had gone with the shopping cards.
The minister explained that the CBE, in collaboration with financial service providers, was implementing a payments switch product. He said among other features of the switch are cardbased point of sale (POS) and automated teller machine (ATM) transactions.
This refers to cards issued by banking institutions for cash-up or payments using authorised payment terminals that will be connected to the Eswatini payments switch. “Presently these transactions are routed in switches located in other jurisdictions. Local switching of these card-based transactions is scheduled to go live from the last quarter of the financial year. This development will come with regulatory access to credible local data and lower user cost to domestic cardbased transactions, as opposed to the present arrangement of using foreign switch platforms,” he said.
In a previous submission to the Public Accounts Committee, Royal Science and Technology Park (RSTP) Chief Executive Officer Vumile Dlamini said in 2019 alone, the country spent E360 million annually on the foreign-based switch. At the time the CEO stated that the entity was incapacitated to have this technology, but financial challenges became the main barrier. This means in the last three years, Eswatini has lost at least E1 billion as a result of not having the technology. Known as the payment switch, this technology is a tool that facilitates communication between different payment service providers.
Solution
According to mp2pfintech.com, the switch typically provides a merchant-driven rules-based authorisation and switching solution. It dynamically routes payment transactions between multiple acquirers and payment service providers.
It sits at the centre of payment processing and dynamically acquires routers, switches, authenticates and authorises transactions across multiple payment channels. Eswatini currently does not have this technology and for every swipe or contactless payment, South Africa gains a certain percentage as the technology is operated in the neighbouring country.
This is because for RSTP to have this technology set up, it would entail having the disaster recovery site, which the entity still does not have due to the current economic challenges that have seen the entity getting inadequate funding from government. A disaster recovery (DR) site is a facility an organisation can use to recover and restore its technology infrastructure and operations when its primary data centre becomes unavailable.
At the time, Dlamini said currently, the entity was building the secondary site of the disaster recovery and until it was complete, the entity was unable to fully implement its mandate and other entities were not giving them business due to the incomplete disaster recovery site. He stated that currently the institution has a primary disaster recovery and their current clients use them as their backup, but they could not offload all their data to them because of the incomplete disaster recovery site.