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Learning Unit 3 - Summary Law of Banking and Payment in
South Africa
Methods of Payment Law (Varsity College)
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Learning Unit 3: Payment Systems
1. Introduction
In South Africa payment by means of cash is the only form of legal tender. As payment by
cash is not always possible for a variety of reasons. As payment by cash is not always
possible for a variety of reasons, other payment mechanisms are sometimes used to
effect payment
3 broad categories of payment systems:
Paper-based transfers
Electronic fund transfers (EFTs)
Payment cards
Take & Save Trading CC & others v The Standard Bank of SA Ltd 2004 (4) SA 1 (SCA)
(dictum evaluation):
This dictum thus implies that a credit transfer, once effected, is final and
cannot be reversed without the consent of the beneficiary. Schulze
criticises the above obiter statement and submits that “where the
beneficiary was never entitled to receive the money in the first place, his
consent should surely not be a prerequisite before the transfer may be
reversed.
He points out that the inter-bank agreement is confidential, and one
therefore has to accept the evidence presented in the Take and Save that
the inter-bank agreements prohibit the reversal of an electronic fund
transfer unless the beneficiary consents to it
The National Payment Systems Act 78 of 1998 (NPS Act) regulates the South African
National Payment System (NPS).
The South African Reserve Bank (SARB) is the overseeing and regulatory body of the
NPS. The SARB recognises the Payments Association of South Africa (PASA) as the
payments systems management body (PMSB) as mandated to organise, manage and
regulate the participation of members in the payment system.
Downloaded by Linc Kay ()
, lOMoARcPSD|14363929
2. Paper-based transfers
With cash representing the first age of payment, paper-based transfers represent the
second great age. Well-known examples of paper-based transfers include cheques, debit
order, stop order, letters of credit (LCs), travellers’ cheques and many more.
2.1 Bills of exchange, cheques and promissory notes
Which act regulates negotiable instruments? Bills of Exchange Act (BEA)
Are cheques a form of legal tender? No
Bill: BEA defines a Bill as an unconditional order in writing addressed by one person to
another, signed by the person giving it, requiring the person to whom it is addressed to
pay on demand or at a fixed or determinable future time, a sum certain in money to a
specified person or his order or to bearer.
Cheque: BEA defines a cheque as a bill drawn on a bank and payable on demand.
Promissory note: BEA defines a promissory note as an unconditional promise in writing
made by one person to another, signed by the maker, and engaging to pay on demand or
at a fixed or determinable future time, a sum certain in money, to a specific person, or to
his order, or to bearer
Who are the parties involved in a cheque? The drawer, the drawee banker and the
payee or bearer if the cheque is payable to bearer.
What is a bank? Banks are public companies incorporated under the Companies Act and
registered under the Banks Act, and which take deposits from the public. (The Bills of
Exchange Act 34 of 1964) ‘bank’ means body of persons, whether incorporated or not,
that carries on the business of banking, and includes a bank, a mutual bank, the Reserve
Bank, and the Post Office Savings Bank.
What is the purpose of a bank cheque? Bank cheques are mainly used in transactions
involving large sums of money as these transactions call for a safe method of effecting
payment.
Downloaded by Linc Kay ()
Learning Unit 3 - Summary Law of Banking and Payment in
South Africa
Methods of Payment Law (Varsity College)
StuDocu is not sponsored or endorsed by any college or university
Downloaded by Linc Kay ()
, lOMoARcPSD|14363929
Learning Unit 3: Payment Systems
1. Introduction
In South Africa payment by means of cash is the only form of legal tender. As payment by
cash is not always possible for a variety of reasons. As payment by cash is not always
possible for a variety of reasons, other payment mechanisms are sometimes used to
effect payment
3 broad categories of payment systems:
Paper-based transfers
Electronic fund transfers (EFTs)
Payment cards
Take & Save Trading CC & others v The Standard Bank of SA Ltd 2004 (4) SA 1 (SCA)
(dictum evaluation):
This dictum thus implies that a credit transfer, once effected, is final and
cannot be reversed without the consent of the beneficiary. Schulze
criticises the above obiter statement and submits that “where the
beneficiary was never entitled to receive the money in the first place, his
consent should surely not be a prerequisite before the transfer may be
reversed.
He points out that the inter-bank agreement is confidential, and one
therefore has to accept the evidence presented in the Take and Save that
the inter-bank agreements prohibit the reversal of an electronic fund
transfer unless the beneficiary consents to it
The National Payment Systems Act 78 of 1998 (NPS Act) regulates the South African
National Payment System (NPS).
The South African Reserve Bank (SARB) is the overseeing and regulatory body of the
NPS. The SARB recognises the Payments Association of South Africa (PASA) as the
payments systems management body (PMSB) as mandated to organise, manage and
regulate the participation of members in the payment system.
Downloaded by Linc Kay ()
, lOMoARcPSD|14363929
2. Paper-based transfers
With cash representing the first age of payment, paper-based transfers represent the
second great age. Well-known examples of paper-based transfers include cheques, debit
order, stop order, letters of credit (LCs), travellers’ cheques and many more.
2.1 Bills of exchange, cheques and promissory notes
Which act regulates negotiable instruments? Bills of Exchange Act (BEA)
Are cheques a form of legal tender? No
Bill: BEA defines a Bill as an unconditional order in writing addressed by one person to
another, signed by the person giving it, requiring the person to whom it is addressed to
pay on demand or at a fixed or determinable future time, a sum certain in money to a
specified person or his order or to bearer.
Cheque: BEA defines a cheque as a bill drawn on a bank and payable on demand.
Promissory note: BEA defines a promissory note as an unconditional promise in writing
made by one person to another, signed by the maker, and engaging to pay on demand or
at a fixed or determinable future time, a sum certain in money, to a specific person, or to
his order, or to bearer
Who are the parties involved in a cheque? The drawer, the drawee banker and the
payee or bearer if the cheque is payable to bearer.
What is a bank? Banks are public companies incorporated under the Companies Act and
registered under the Banks Act, and which take deposits from the public. (The Bills of
Exchange Act 34 of 1964) ‘bank’ means body of persons, whether incorporated or not,
that carries on the business of banking, and includes a bank, a mutual bank, the Reserve
Bank, and the Post Office Savings Bank.
What is the purpose of a bank cheque? Bank cheques are mainly used in transactions
involving large sums of money as these transactions call for a safe method of effecting
payment.
Downloaded by Linc Kay ()
